Boris Johnson’s nationality and borders bill has suffered four defeats in the House of Lords, including the removal of a crucial plank of the government’s immigration strategy that would have criminalised refugees who arrive in the UK through an irregular route.

Clause 11 of the bill would have allowed refugees to be divided into two classes based on how they arrived in the UK. Peers voted by 204 to 126, defeating the clause by a majority of 78.

If the clause had remained, people who made their own way to the UK would be given an inferior form of protection with more limited rights, compared with those who arrived through government-sanctioned routes.

It meant that anyone arriving in the UK by an illegal route, such as by a small boat across the Channel, could have their claim ruled as inadmissible, receive a jail sentence of up to four years, have no recourse to public funds, and could have their family members barred from joining them.

Monday was the first of three days of debate during the bill’s report stage. After that, changes made in the Lords will return to the Commons. The government could then accept the changes imposed by the Lords or challenge them.

Steve Crawshaw, the policy director of Freedom from Torture, said the vote had delivered a bloody nose for the government.

“The cruelty and illegality of the nationality and borders bill, for Ukrainian and other refugees, was never in doubt. This resounding victory means that even this government, a stranger to the truth and humanity, cannot avoid confronting that,” he said.

Speaking against the clause, the refugee campaigner and Labour peer Lord Dubs said people fleeing Afghanistan and Ukraine “give the lie to the idea that somehow you can get here by the sort of route that the Home Office approves of”.

All four defeats came at the report stage of the controversial nationality and borders bill. Peers also amended the Bill to scrap a controversial measure that would allow people to be stripped of their British citizenship without warning.

The House of Lords supported by 209 votes to 173, majority 36, a move to strike the proposed power from legislation.

Under existing law, deprivation of citizenship can be carried out for those people considered to pose a threat to the UK – including terrorism or war crimes – or if they obtained their citizenship fraudulently.

The bill was supposed to enable citizenship to be removed without notice if it would “not be reasonably practicable”, and in the interests of national security.

Maya Foa, director of the non-profit organisation Reprieve, said: “Government’s powers to strip citizenship are already the broadest in the G20. They are used disproportionately against people from ethnic minority communities. MPs must listen, and strike this discriminatory provision from the bill.”

Home Office examples of where they would strip citizenship without notification include if someone is in a war zone or if informing them would reveal sensitive intelligence sources.

Peers also defeated the government’s plan to stop the relatives of exiled Chagos islanders from being entitled to British citizenship. The House of Lords backed by 237 votes to 154, majority 83, a move that would allow descendants of a person born before 1983 on the Chagos Islands to register as a British overseas territories citizen and as a British citizen.

Arguing the need for the amendment to the bill, Labour peer Lady Lister said it aimed to tackle the “injustice” faced by descendants of Chagossians who were evicted by the British government.

She said: “Those descendants are now denied the right to register as citizens that they would have had were they still resident in their homeland. The reason they are denied that right is because they are no longer resident, but that is because they have been exiled from that homeland by the British government.”