Culture Secretary Tessa Jowell has declared that plans for a Las Vegas-style supercasino in Manchester were "very much alive", despite Wednesday night's shock defeat in the House of Lords.
The future of the Government's whole casino strategy - including 16 smaller casinos around the country - were thrown into doubt after it was rejected by peers. But at Thursday morning's meeting of the Cabinet, Ms Jowell made clear she was determined to find a way to press ahead with the plan.
The Prime Minister's official spokesman said: "As Tessa Jowell told the Cabinet, this policy is very much alive. Ministers will want to reflect on where we are. What nobody should be in any doubt about is the intention."
Although the plans were rejected by the Lords by just three votes, the spokesman emphasised that in the Commons there was a 24-vote majority for the proposals, insisting: "In the Commons, the Government won (on Wednesday) night. That is the important thing."
The Department for Culture, Media and Sport stressed that no decision would be made public until after the announcement purdah period running up to the Scottish, Welsh and English local elections on May 3.
Earlier there was a mood of despondency, with one ministerial source suggesting there was a feeling in the aftermath of Wednesday night's vote that "we could just drop the whole thing".
The source acknowledged there was nothing to stop the Government trying to get the plans through Parliament after the May elections, but added: "Whether there is the political will or not is another matter."
Ms Jowell had pinned the entire casino plan on a single all-or-nothing package which had to be approved by both the Commons and the Lords.
The move meant that MPs and peers could not oppose the controversial choice of Manchester as the site of the new super-casino without rejecting the 16 smaller casinos at the same time. Ms Jowell previously warned there would be "no plan B quickly" if the Government were defeated.
Manchester Blackley Labour MP Graham Stringer urged ministers to "stick to their guns" and overrule the unelected Lords.
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