The Prime Minister resisted the demands for a retreat but after one of his most acrimonious clashes with Tony Blair in the Commons, Tory MPs accused John Major of "inept" handling of the issue and warned they would not defend it in their constituencies.
Conservative MPs said it was one of the worst performances they had seen from the Prime Minister, adding to the impression of a government which has lost its grip on events. Mr Major, clearly angered by Mr Blair's attack, snapped at the Labour leader that "despite his piety" he had "misconstrued" what had happened.
The Tory MPs were angry at leaked Whitehall papers showing that benefit officials will be stopped from automatically directing claimants to the Royal British Legion.
"I will not go back to my constituency and say that I have just had a socking great pay increase but we are going to kick the war pensioners in the teeth," said one former minister. "Major must have taken leave of his senses."
Labour last night insisted that the total savings would be pounds 35m on cuts in payments for loss of hearing and pounds 15m on administration.
The savings arose over a reversal in medical advice that hearing was impaired by noise from explosions or gunfire, disqualifying future war pensioners from extra benefit for loss of hearing.
Clearly seeing the storm brewing, Peter Lilley, the Secretary of State for Social Security, in a leaked letter to William Waldegrave, the Chief Secretary to the Treasury, said: "All my ministers were against this move and it is not something we would choose to do but in the end it is not a matter over which there is any choice."
The papers, which The Independent has obtained, show that Mr Lilley asked for four further measures to buy off the pensioners' lobby - to make payment for funeral expenses for war disablement pensioners, costing pounds 60,000 a year; improving clothing allowances for war disablement pensioners costing pounds 350,000 a year; ending the distinction between ranks in payment of gratuities for service related disablement at an undisclosed cost; and a goodwill payment to the Chaseley home for severely disabled war pensioners.
t Julian Lewis, Tory candidate in New Forest East, is to stand down as the deputy director of Conservative Research Department.Reuse content