A cross party group of peers tabled amendments to the children and families bill that would have introduced plain packaging, although implementation will be subject to an evidence review.
In July the government delayed plans to ban branding on cigarette packets, saying it wanted to first see the impact of a similar policy in Australia.
A review of plain packaging on cigarette packs is expected to be announced, with health minister Jane Ellison denying a policy u-turn.
"What the government said in July was that it would look at the emerging evidence," she said.
Deputy Prime Minister Nick Clegg said the government is keeping "an open mind" on plain packaging until the review concludes in March.
The Labour party has criticised the delay in implementation.
"We need immediate legislation for standard cigarette packaging, not another review," said Luciana Berger, the shadow public health minister. "The Government needs to stand up to the tobacco industry's vested interests."
Mike Ridgway, a spokesman for UK packaging manufacturers in the tobacco sector, told Packaging News there is no evidence in Australia that smoking trends are influenced by packaging. "Recent studies have revealed increases in the illicit and counterfeit trade have taken place during this period of time," he said.
The Tobacco Manufacturers Association has also criticised the move, saying a UK-wide consultation into standardised packaging found 64% of the responses were opposed to plain packaging, and warned of the economic implications of the policy.
"We hope that any review will be open-minded, and take into account the views and concerns of the TMA and the thousands of businesses, large and small, who don't see 'plain packaging' as a workable solution or an effective tobacco control measure."
A spokesman for the British Brands Group told Packaging News it was crucial that public policy on the packaging of cigarettes is based on reliable, hard evidence if there are not to be unintended consequences.
"Plain packs are unquestionably easier and cheaper to counterfeit and a more price-conscious, less quality-driven consumer would play into the hands of the fakers. Such people tend not to restrict their sales to adults only, again countering the policy goals."
Angela Harbutt, campaigns manager at the smokers' group Forest, added: "Although we think it's premature, we welcome a further review as long as it?considers all the available evidence?and is genuinely independent and impartial."
The World Health Organization said earlier this year that plain packaging would increase the impact of health warnings, and make tobacco products less attractive for adults and children.
