Boris Johnson suffered a string of defeats in the House of Lords after peers backed a move to protect the NHS in a trade deal.
The new law would ban any trade deal that “undermined” the NHS’s ability to provide free services or control drug prices.
Anti-privatisation campaigners hailed the late-night 233-143 vote, backed by Labour, the Lib Dems and Crossbenchers, after more than 300,000 people signed a petition in favour.
It was one of four defeats inflicted on the PM over amendments to the Trade Bill last night.
Peers also voted to block trade deals with any country that commits genocide or violates human rights, and demanded a bigger say for Parliament over the details of any deal after Brexit.
But it could lead to a showdown in the House of Commons - after Tory ministers vowed to oppose the amendment on protecting the NHS.
Ministers say they are already promising to protect the NHS, and the wording of the amendment will effectively rip up trade deals they’ve already signed.
Tory minister Viscount Younger said: “We have demonstrated time and again that we are not selling off the NHS, and this will not change.”
He added: “This would effectively prohibit the implementation of any continuity trade agreement that the Government have signed, which does not explicitly meet these requirements, even though this amendment did not exist at the time of their negotiation.
“Every single continuity agreement that we have negotiated over the past three years would be left null and void, without an implementing power.
“We would be forced to reopen negotiations with every single continuity partner, which would no doubt be used to extract costly concessions.”
But peers defeated the government anyway.
Labour’s Baroness Thornton said: “These are national assets which must not be put in jeopardy or squandered in whatever the future holds for UK trade with the world.”
She added: “While the Government have repeatedly pledged that the NHS is not on the table in trade negotiations, we know that there have been detailed conversations between UK and US negotiators, revealing that health services have been discussed.
“The US is probing the UK’s health insurance system and has made clear its desire for the UK to change its drug pricing mechanism.”
The amendment said there could be no trade deal which “in any way undermines or restricts” the ability of authorities to “provide a comprehensive publicly funded health service free at the point of delivery,” or “regulate and control the pricing and reimbursement systems for the purchase of medicines or medical devices”.
The amendment also has several other lines, including protecting the employment rights of public sector workers and maintaining medicine safety.
Johnbosco Nwogbo of We Own It, which started the petition, said: “This is nothing short of a massive victory for people power.
“With this amendment, we can ensure that our NHS is kept off the table in trade negotiations, and we can prevent US healthcare companies getting even more access to our precious health service.
“But the battle isn’t over. Now we need MPs to follow suit and vote to keep these amendments in the Bill, and protect our NHS once and for all.”
Elsewhere peers - including 16 Tory rebels - overwhelmingly backed an amendment that would ban a trade deal with any country that committed genocide.
Peers backed by 287 votes to 161 the cross-party measure that would block trade deals with countries judged so by the High Court.
The Government suffered a further defeat with peers backed 297-221 a Labour-led move, aimed at ensuring the UK did not agree or continue trade deals with countries that violated human rights.
Labour’s Lord Collins said: "This amendment proposes a triple barrier against trade agreements with countries that abuse human rights.
"Sympathetic words... on the need for human rights and that human rights are taken into account are not enough. They need to be translated into a clear and accountable process."
But Tory Lord Grimstone said there were a number of "concerns and legal risks" raised by the amendment, which meant the Government was unable to support it.
He added: "We do seek to ensure that human rights are recognised and protected in all our free trade agreements."
The government was also defeated in the Lords over giving Parliament a bigger say in the approval of post-Brexit trade agreements.
Peers backed by 308 votes to 261, majority 47, a cross-party amendment to the Trade Bill calling for greater accountability and transparency of deals.
The legislation will enable the UK to forge new commercial ties with other countries after breaking from the EU.
But members of the Lords said negotiating objectives should be put before Parliament and approved by both Houses before talks on potential trade agreements start.
The amendment also urged the Government to consult the devolved administrations on negotiating objectives and assess the possible impact on human health, animal welfare and the environment.
