Mental Health Alliance chair Andy Bell said: 'The House of Lords made some really important changes that are now unlikely to ever see the light of day.'
The alliance and the Lords wanted the definition of mental disorder to exclude anything related to religious beliefs and sexual orientation. They also wanted the law to be changed so people can only be forced to have treatment if they are unable to make decisions.
Parliament has made concessions including an assurance that treatment will only be used if it will alleviate a patient's symptoms.
But speaking on behalf of the breakaway Mental Health Coalition, Royal College of Nursing mental health adviser Ian Hulatt said: 'The government has made progressive changes to the bill in the Commons, giving it stronger focus on health benefits. As it returns to the Lords we hope peers will support the improvements.
'We believe this legislation will provide a good foundation for modern, patient-centred services.'
The Lords will now vote on changes and could suggest alternatives or insist their previous version is instated.