This had been the final sticking point in the bill, which although whole-heartedly embraced by the majority of lesbian and gay equality groups, had been criticised for the financial inequality. Now, couples who sign up to the Civil Partnership bill will be allowed survivor pension rights in private schemes. These will be fully retrospective to 1988, as they currently are to widowers. The amendment will be added to the bill before it returns to the House of Lords later this month.

The change of heart was welcomed by trade unions, financial groups and lesbian and gay lobby groups. The directors of Isis Financial Planners, the UK's leading authority on financial discrimination against same-sex couples, said they were "delighted" by the new amendments to the bill. 'Back in May earlier this year, we supported this very acceptable compromise presented by the Liberal Democrat peers Lord Lester of Herne Hill and Lord Goodhart. Going back to 1988 is logical, as this was when widowers achieved equality with widows," director Louis Letourneau said. "I am delighted that the Government has listened to experts in the area. This is absolutely fair and we are very pleased with the result."

Unison General Secretary Dave Prentis also backed the proposed changes. “This is a milestone in ending discrimination against lesbian and gay couples," Prentis said. "We have always argued the case for decent pension provision and are pleased that the Chancellor, Paymaster General Dawn Primarolo and Pensions Minister Alan Johnson have acted to remedy an inequality”.

A spokesperson for Stonewall said they were "thrilled" with the amendment. "The Civil Partnership Bill is a landmark piece of legislation but until now it has had a hole in the heart," Stonewall chief executive Ben Summerskill has said recently, adding that equality on this issue was "long overdue".

However, Isis' Maggie Fleming indicated that the fight for financial equality was not completely over. "One financial issue still remains", she said today. "We would like to see a clear announcement by the Treasury that the next Finance Bill will introduce full equality with respect to Inheritance Tax exemption, and Capital Gain transfer between same-sex couples which is currently enjoyed by married couples." "I don't think that we can rest until this is clearly stated."

The amendments will be introduced at the Report Stage in the House of Commons, before being sent back to the House of Lords next month. If the Bill receives Royal Assent in this Parliament, it is expected to become law towards the end of 2005.