The House of Lords has backed the "middle way" compromise on licensed hunting.

Peers voted in favour of licensed hunts by 366 to 59, after rejecting an outright ban by 331 votes to 74.

The large majority in favour of allowing hunting to continue has left the Lords on a collision course with the Commons, despite peers softening their approach after previously voting for the status quo.

And the government has been left with a major headache as it searches for a way forward.

Following the Commons vote in favour of a total ban on fox hunting, the government had warned peers against further "deadlock or delay".

The warning came from government minister Lord Whitty as the House of Lords began its debate.

"These debates are an important step towards fulfilling our manifesto promise which is to enable there is to be a conclusion on this issue. So today's debate is the next step towards a conclusion. It is not an invitation to opt for deadlock or delay," said Lord Whitty on Tuesday evening.

"Hunting with dogs is contentious and it does need to be resolved."

The government is hoping that all sides will be able to reach a consensus on how to proceed - preferably on its preferred middle way option.

But Monday's renewed vote by MPs showed that Labour backbenchers are unwilling to back down from their support for an outright ban.

Faced with "indicative votes" on three options - self-regulation, a licensing regime and a complete ban - Labour MPs strongly backed a ban on hunting with hounds in England and Wales.

Over 380 anti-hunt MPs from all parties were joined by the prime minister in voting for a total ban. Just 175 MPs voted against a ban, with 371 voting against the middle way option.

The strength of the vote, roughly the same as the last time the Commons voted on the issue, indicates that MPs are in no mood to compromise.

As peers continued the debate, Conservative frontbench spokesman Baroness Byford said it was "incredible" that fox hunting was again the subject of debate.

"It is incredible that we are again debating the issue of hunting with dogs when the countryside is in crisis," she said.

Urging a vote for the status quo, she added: "Now is not the time to encourage bigots to destroy Britain's rural economy."

"Your Lordships are being offered two other options. The whole issue of hunting is as much about personal liberty as about anything else. I cannot help but feel that the government has failed to grasp this perhaps to the extent of putting spin and party political considerations ahead of the national interest.

"It is a free vote but I am proud to say I shall be opposing those who support a ban on hunting. I desperately hope all of your lordships appreciate what is at stake here," she said.

In contrast, Liberal Democrat spokesman Lord McNally said it was time for the Lords to give way to the Commons.

"I believe hunting with dogs is cruel and I don't think there is a middle way between having hunting and banning hunting," he said.

"I am much impressed by the Commons having come to a clear and settled view on this subject...The constitution demanded that the rights and views of MPs should prevail and if peers rejected it, then the Parliament Act should be used to put a Bill banning hunting into law.

"`It is the clear and settled view of the Commons and it cannot be thwarted by this unelected House by the threat of extra-Parliamentaryaction. That would be a constitutional outrage," he warned peers.

Conservative peer Lord Mancroft, a board member of the Countryside Alliance, urged a "constructive" vote and said the middle way option could be made to work, despite the risks.

"I believe that the middle way proposal can be made to operate, if it is truly independent. The board of the Countryside Alliance is willing to try to persuade its members and supporters to support us in trying to make this work," he said.

"We need the government to display a little courage, a little openness, and a little honesty in its handling of this issue. We must take this one-off opportunity. This is the only chance we have of finding a peaceful resolution to this interminable and divisive debate."