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Peers who live outside of London will be able to claim up to £100 a night for accommodation when they attend sittings of the House of Lords from next month.
The sum is on top of a £342 allowance for each day they attend, while peers can also claim for travel expenses.
The change was voted through unopposed by peers and comes in from 15 April.
Lord True said the move would help the chamber to be accessible to all, regardless of someone's financial position or where they live.
The Lord Privy Seal, who is responsible for procedure, told peers the Lords had become "far too much a House of the south-east of England".
"It is not right that some noble Lords may be deterred from coming to this House because attendance would impose a significant financial burden on them," the Tory peer said.
Most peers, except ministers, do not receive a salary for their parliamentary duties. Peers who receive a ministerial salary are not allowed to claim allowances.
Under the changes, peers whose registered home address is outside Greater London will be able to claim up to £100 towards the cost of a hotel or similar accommodation when they are attending a sitting of the House or a Lords Committee.
Lord True said the maximum allowance was "proportionate" and below the average cost of London hotel accommodation.
The change, which was recommended in a report by the cross-party House of Lords Commission, was welcomed by Labour and the Liberal Democrats.
The report noted that the current scheme compensates peers at the same level whether or not they live in London, despite hotel costs rising significantly in recent years.