The Government suffered defeat in the Lords over its plans to down-play income-related measures of child poverty levels by 290 to 198, a majority of 92.
Peers backed Rt Revd Paul Butler's amendment to the Welfare Reform and Work Bill which will now force Ministers to present a report to Parliament each year setting out the percentage of children in low income households.
Bishop Paul said the income-related situation needed to be recorded so that it could be assessed with other measurements of deprivation.
He said: "There is also a wealth of academic evidence pointing to the damaging effects that income poverty has on children's well-being, including their health, education and future employment prospects.
"We know, for example, that low income impacts on children's cognitive ability, educational attainment, conduct problems and mental health, with serious implications for their future life chances."
The government had wanted to remove the focus on low income when considering child poverty because it claimed there were many other reasons that left young people bellow the poverty line.
Work and Pensions Minister Lord Freud said that "life chances" indicators were a better way of monitoring what was happening, and of directing Government resources most effectively to tackle the problem.
"With all due respect, the temptation to place too much emphasis on income transfers as a means of reducing child poverty is not one that the current Chancellor appears to struggle with," the bishop blasted.
"I agree that it is important to tackle the underlying drivers of poverty, but that can be done without abandoning all the existing income-based measures of poverty.
"The real issue is committing to, and resourcing, an effective long-term strategy to reduce child poverty, rather than finding alternative ways to measure it."
Bishop Paul's amendment ensures ministers must tell Parliament on an annual basis how many children are living in households where the net income is 60% below the average household.
Minister Lord Freud said the move was not needed as income-related statistics would still be collated, but opposition peers warned this practice could be quietly stopped in the future.
