The Government suffered a symbolic defeat when MPs voted by 267 to 246 on a Liberal Democrat motion to give all Gurkha soldiers equal right of residence in Britain.
Commenting after the vote defeating the Government, Liberal Democrat Leader, Nick Clegg said: "This is a historic victory for the Gurkhas who have served our country so bravely."
Nick highlighted that "this Government has now lost its moral authority. From the first moment I challenged Gordon Brown on this over a year ago, he didn't understand that there was a simple moral principle at stake."
Nick stressed our gratitude to the "People who are willing to die for our country" and added they "should be allowed to live in our country.
"The Government must listen to Parliament and scrap these shameful rules immediately and grant justice without conditions to all retired Gurkhas."