After lobbying by the Advertising Association, peers voted by 158 votes to 141 on Tuesday to amend the Communications Bill.
The bill will allow Ofcom to bring regulation of TV and radio into line with print and there has been a fierce debate over consumers' influence. Consumer groups want a free reign over Ofcom's remit, including content, while broadcasters argue the panel should not advise on content.
The Government tried to strike a balance by giving the panel power to consider content matters referred to it by Ofcom. But the Tory peer Baroness Buscombe told the Lords the ad industry was "deeply concerned" about the proposal. She said: "This industry has proved entirely capable of self-regulation."