Peers voted by 186 to 133 to keep the protection in place. The matter will be passed back to the House of Commons where MPs voted for repeal.
The protection makes clear that criticising homosexual conduct or encouraging people to refrain from such conduct is not a crime.
The Government says the protection is not necessary, insisting that the ‘homophobic hatred’ offence would not catch the expression of such beliefs.
But several members of the House of Lords were concerned about incidents of Christians being challenged by the police because of their beliefs on sexual ethics.
Mike Judge, Head of Communications at The Christian Institute, said: “Genuine supporters of free speech will be pleased with this result.
“Democracy depends on the freedom of people to challenge ideas, to dispute with each other, to contend for what they believe.
“Too many Christians have already been intimidated by over-zealous police action because they gave voice to their views on sexual ethics.
“Surely the world is big enough to allow all sides to express their beliefs about sexual behaviour without fearing a knock on the door from the police.”