Peers have inflicted a defeat on the Government over the way in which the BBC licence fee is set amid concerns of "clandestine" deals behind closed doors.

The House of Lords backed by 268 votes to 201, majority 67, a cross-party amendment to the Digital Economy Bill, which would see an independent expert body propose the level of the levy needed to fund the broadcaster.

Ministers had argued the licence fee was effectively a tax and so was a matter for the Government alone.

However, those backing a change to the system argued previous settlements had seen "raids" on BBC funding, including the broadcaster being landed with the cost of providing TV licences to the over-75s.

Peers heard that without reforms, the Government could impose a funding settlement on the broadcaster without any checks or balances, leaving "a Sword of Damocles" hanging over the corporation.

The House of Lords also agreed that the Culture Secretary should hold a public consultation on BBC funding and submit report to Parliament, aimed at introducing greater transparency to the controversial process.

In deciding the final settlement, the Cabinet minister would also have to set out their reasons if they chose to reject the recommendation made by the newly created BBC Licence Fee Commission.

In proposing the changes to the Bill at report stage, independent crossbencher Lord Best, who heads the Lords communications committee, highlighted criticism of the current system.

He said: "This process has been variously described as being clandestine, behind locked doors, frantic, purely political, fixed over a weekend.

"It gives the Secretary of State the power to impose a funding settlement on the BBC following secret talks and without any external checks and balances.

"No one believes that this is the best way to come to a considered evidence-based sensible decision on the vital question of a licence fee, which millions of citizens will pay."

He added: "Bringing these matters into the open, creating a proper transparent process would moderate the unfettered, life-or-death authority of the Secretary of State over the BBC's funding and therefore over its future.

"In doing so the new process would reduce the chilling effect on the freedom of the BBC to act independently of government which otherwise remains, while the Secretary of State holds the Sword of Damocles over the BBC's board and management."

Independent crossbencher Lord Pannick said: "The process for setting the licence fee is manifestly inadequate. It lacks transparency...indeed it encourages a last minute political fix."

Former BBC chief and independent crossbencher Lord Birt referred to the "infamous midnight raids" by the Government on BBC funding, which he said was "simply unscrupulous pragmatism".

"Switching responsibility to the BBC for paying for services which had previously been funded by government," he added.

Lord Birt argued the Government had been "completely oblivious" to the consequences for BBC funding and the knock-on impact for services.

He said: "This is government at its worse, frankly."

Supporting the amendments, opposition spokesman Lord Wood of Anfield said: "We think this is a way of restoring the functionality and transparency of the licence fee setting process and ensuring the BBC can be funded to do what we all expect the foremost public broadcaster to do."

Responding, culture minister Lord Ashton of Hyde said: "Taxation is a matter for the elected government. Only the Government has oversight of the balance of taxes from different sources.

"It would therefore not be possible for an independent body to have oversight of the interaction between this tax rate and other tax burdens."

He added: "Funding a public service is a not a straightforward topic for public consultation."

He went on: "It is a tax and the Government doesn't consult on taxes."

Later, the Government suffered a further defeat when peers backed a move by 217 votes to 188, majority 29, to ensure prominence in electronic TV guides for public service broadcasters, like the BBC.

Proposing the cross-party amendment, Lord Wood said there was a need for such such output "to be accessible and prominent to viewers as viewing habits change".

Lord Ashton argued there was no need for the measure telling peers that "if broadcasters produce excellent content, audiences will find it".

Peers later demanded that new powers to tackle ticket touting were beefed up to include a ban on buying excessive numbers of tickets and to require more extensive labelling for each stub.

In the Government's third defeat of the night, amendments tabled by Conservative former sports minister Lord Moynihan were approved by 180 votes to 157, majority 23.

The peer, an ex-chairman of the British Olympic Association, said the move would offer greater protection to the "honest sports fan" from touts.

He said: "If there is an original unique reference number, why not put that on as well to allow the true fan to check before he travels with his family, before he spends a lot of money coming down to London - for the sake of argument, to go to the O2 - to be able to know that is not a counterfeit ticket.

Lord Moynihan said musicians and sports stars did not want to see tickets counterfeited or fans turned away, citing testimony from the manager of singer Ed Sheeran, who appeared before a select committee last week.

Lord Ashton, speaking for the Government, said the amendments were unnecessary and would be difficult to enforce.