The former Tory Cabinet minister’s Article 50 Bill amendment passed through the House of Lords with a majority of 98.
Heseltine had previously warned that quitting the EU was the "most momentous peacetime decision of our time”.
Lord Heseltine has been fired from his role as Government adviser after leading a Brexit revolt
He was later told that Theresa May was firing him from his Government role.
Responding to the news, he said: "I have just been told by the Chief Whip in the Lords that No 10 is to sack me from the five jobs with which I have been helping the Government following my vote in the House of Lords earlier today.
"This is entirely the right of the Prime Minister and I'm sorry that the expertise which I have put at the Government's disposal over the last six years has now come to an end.
"However, in the last resort, I believe, as I said in the House of Lords, the future of this country is inextricably interwoven with our European friends.
"It's the duty of Parliament to assert its sovereignty in determining the legacy we leave to new generations of young people."
Lord Heseltine pictured outside Downing Street earlier today
Lord Heseltine was one of 13 Tory rebels who voted for the amendment.
Brexit Secretary, David Davis, described the amendment vote outcome as “disappointing”, and accused the rebel peers of seeking to “frustrate” Britain’s EU exit.
He said: “[The bill] has a straightforward purpose – to enact the referendum result and allow the Government to get on with negotiating a new partnership with the EU.
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All the pictures from Brexit Bill Tuesday Tue, March 7, 2017
Theresa May is facing a second defeat on her Brexit bill Tuesday as the House of Lords votes on another change which would give parliament the final say on leaving the EU
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Archbishop of Canterbury, Justin Welby, speaks in the House of Lords Chamber at the start of the third day of The European Union (Notification of Withdrawal) Bill
Heseltine served as Defence Secretary under Margaret Thatcher
"It is clear that some in the Lords would seek to frustrate that process and it is the Government's intention to ensure that does not happen.
"We will now aim to overturn these amendments in the House of Commons."
More to follow…