Opposition peers agreed director of Fair Trading John Vickers should be chairman and chief executive of the new Office of Fair Trading set up under the Act for its first two years - until his retirement in 2005 - but that subsequently the two posts will be held by separate individuals.

Tory spokesman Lord Hunt of Wirral said they accepted the need for 'a transitional period' following which the two posts would be held by different people 'to enable the present director-general to complete his contractual term in accordance with the arrangements agreed with ministers', adding, 'we wish him well'.

But he made it clear: 'There remains continuing concern about how best to regulate the regulators.

'I hope that the new structure, combined with a clear commitment to the principles of good corporate governance, represents the right way forward not only for the OFT but for other similar public bodies.'

The act was formally being accepted by the Queen this afternoon (Thursday) before the current parliamentary session ended. Without the deal it would have fallen on prorogation, costing the government one of their flagship measures.