Although the Government won the Commons vote, the scale of the rebellion will encourage the House of Lords to reject the Welfare Reform Bill for a second time. After the vote, Labour peers threatened to scupper the Bill, which could now be delayed for a year because the current parliamentary session ends next week.
Ministers admitted the controversial measure was "under threat". Losing it would be a humiliating blow for Mr Blair. Although Downing Street insisted no further concession would be made, the Government may now have to make a further climbdown to persuade the Lords to approve the Bill.
Rebel Labour MPs stood firm last night despite intense arm-twisting by party whips and being offered significant concessions over the Government's curbs on incapacity benefit for new claimants. The Government's 170-plus majority was slashed to under 60 when the Commons voted to reject changes to the Bill demanded by the Lords.
Lord Ashley of Stoke, the Labour leader of the Lords revolt, later said the rebel Labour MPs had "won the moral argument". He said: "The Government's piffling concessions have made no visible impact on the House of Lords."
David Willetts, the Tories' social security spokesman, said: "This vote is a moral victory for disabled people and a humiliation for the Government. My message to Tony Blair is to stop bullying and start listening."
Ministers took some small comfort from the fact that fewer Labour MPs rebelled than in May, when 65 MPs voted against the Bill. However, the Government had hoped its partial retreat would reduce the rebels' ranks to about 40.
Mr Blair's aides had believed the Labour opposition to the measure would convince Middle England the Government was making "tough choices" on welfare reform. But one admitted: "We wanted a rebellion - but not one as big as this."
Senior party figures conceded that last night's rebellion was not confined to the "usual suspects" on the Labour left and that many mainstream MPs were genuinely worried about the proposals. "This has gone down very badly in the constituency parties," a Blair loyalist said. "It is very serious."
The strong opposition to the reforms on the Labour benches may limit Mr Blair's room for manoeuvre over further changes to the welfare state.
In the short term, the Government faces a battle with the Lords to get the Welfare Reform Bill on the statute book next week. There could be a game of parliamentary ping-pong in which the measure goes backwards and forwards between the Commons and Lords. There were hints that the Government might withdraw its offer to reprieve 75 hereditary peers, including 42 Tories, unless Tory peers backed down over the Welfare Bill. But the Tories vowed to maintain their opposition.
Alistair Darling, the Secretary of State for Social Security, told MPs that the Bill would provide more cash help for the disabled people who needed it most. He conceded the measure would produce long-term savings, but said the Government had a duty to ensure the social security system was modern and efficient.Reuse content