Perhaps the upper house could be modelled on the US Senate, where each County would ellect two "Lords", The US Constitution prescribes that the Senate be composed of two senators from each State (therefore, the Senate currently has 100 Members) and that a senator must be at least thirty years of age, have been a citizen of the United States for nine years, and, when elected, be a resident of the State from which he or she is chosen. A senator's term of office is six years and approximately one-third of the total membership of the Senate is elected every two years.
The UK has 48 English, 32 Scottish and 22 Welsh Counties, so 102, giving an upper house of 204, which would seem to be sufficient.
I think that's not too dissimilar from Labour's plan, although they intend basing it on regional assemblies rather than historic counties. I think you'd need to take account of population distributions too, otherwise (as with the US system) you'd be giving disproportionate weight to low-density areas.
Personally I think the existing system would be ok if it wasn't so open to being padded by blatant cronyism.
A few simple tweaks would sort a lot of the issues out:
1. Differentiate between fixed-term 'Voting Peers' (active members of the Lords who get to vote on legislation) and 'Life Peers' (people awarded as recognition, can speak, but can't vote)
2. Set a fixed number of a few hundred voting peers based on attendance over the last 5 years split roughly Tory/Labour/Independent
3. Allowing the crown, the government, and the opposition to nominate new voting peers on the basis of one in one out.
4. Voting peers become Life peers at the end of their term
