Fellow Tory Remainers Anna Soubry and Ken Clarke were not convinced by ministers' concession and voted against the government by backing the Lords amendment on a "meaningful vote".
Some lawmakers tried to shout him down and accused the government of wanting too much power.
But pro-EU Conservative lawmaker Dominic Grieve said that with the government's move "I am quite satisfied that we are going to get a meaningful vote on both "deal" and "no deal" scenarios.
The government says lawmakers should be offered a choice only between its final deal and no deal at all. The U.K. voted to leave the political and economic bloc of 28 nations in June 2016.
On the other side, a handful of Labour Leavers are likely to back the government in breach of their own party whip, making it hard to predict outcomes.
Her fellow Conservative backbencher Stephen Hammond said: "Parliament must be able to have its say in a "no deal" situation".
This included the House of Commons having to approve any government action in Brexit talks if it has not reached an exit deal with the European Union by the end of November.
Earlier, Brexit minister David Davis told parliament a government defeat would undermine negotiations with Brussels and warned lawmakers the government would never allow them to "reverse Brexit".
"I absolutely trust what the Prime Minister says to us", he told BBC Radio 4's PM programme.
The former attorney general told Press Association: "The Prime Minister agreed that the amendments we had tabled, and the issue that we had raised about Parliament's role in the event of no deal was an important one, and undertook to work with us to put together amendments to present in the Lords which would address those concerns".
The Government has won the first votes during today's Brexit showdown.
But the resignation by Phillip Lee, who has always been critical of the government's Brexit strategy, underlined the deep rifts in the party over Brexit that makes such votes anything but easy.
Mr Grieve ended up voting with the Government - against his own amendment - and said he believes MPs will be offered a meaningful vote anyway.
A member of Theresa May's government resigned Tuesday ahead of a key Parliamentary debate on legislation regarding Britain's departure from the European Union.
The Prime Minister appeared to have defused a potentially explosive row over the EU customs union on Monday night as Tory pro-Europe rebels Sir Oliver Letwin and Nicky Morgan and Brexiteers Jacob Rees-Mogg and Sir Bill Cash came together to table a separate compromise amendment backing "a customs arrangement" with the EU.
If May is defeated in the House of Commons it will be yet another blow to a prime minister whose authority has been challenged several times since last year's election.
Matthew Pennycook, one of the opposition Labour Party's Brexit policy team, urged lawmakers to vote to hand parliament more powers. It also attacked the unelected nature of the House of Lords (which traditionally scrutinizes laws passed to it by the elected lower chamber), linking it to a perceived attempt to frustrate the Brexit process.