Lord Taylor of Blackburn, 87, was involved in a collision with a van while riding his mobility scooter last week.
The Labour leader in the Lords, Baroness Smith of Basildon, said: “Tom Taylor had a life-long commitment to the Labour Party, through both local government and Parliament, and was held in high regard and with great affection by his party colleagues.
“Tom was a committed member of the House of Lords right through to the tragic circumstances which led to his death. We in the Labour peers group are very sad and will miss him dearly.”
Lord Taylor was taken to hospital following the incident. His injuries were initially not thought to be life-threatening.
A former leader of Blackburn Town Council in the 1970s, he was made a life peer by prime minister James Callaghan in 1978.