However, long-term doubts remained about her chances of gaining a place in a Blair Cabinet, if Labour win office, after she defiantly said: "I will not be silenced."
She pulled out of a series of interviews on the privatisation of Railtrack yesterday, although she is Labour's leading spokesman on transport, because of the row over her remarks on tax.
A Tory Party aide said: "If I'd seen her today I would have given her a big hug and a kiss. We were in real trouble until she opened her mouth."
Labour leadership sources were angry last night that Ms Short's remarks blunted Labour's attack on the flotation of Railtrack yesterday, and deflected attention from Mr Blair's successful Washington trip and Labour's triumphant by-election victory in Staffordshire South East.
"We were on a roll until this happened," said a senior Labour source. It threatens to undermine Labour's attack on the Tories over the privatisation of Railtrack in a full-scale Commons debate which Ms Short will open tomorrow.
The Blair sources were doubly irritated that after making the remarks at the weekend on GMTV, she allowed the row to revive for a second day by seeking to defend them on BBC radio as a stand of principle.
Ms Short said politicians had to take a moral stand. She also dismissed criticism from the Blair camp that she had been "unprofessional" to suggest that "people like me" should pay more in tax.
As Labour tried to limit the damage, a senior Blair aide said: "Clare is not going to leave the Shadow Cabinet."
Ms Short accused the press of "a conspiracy to stop politicians talking honestly - so you get robots who just clone what they're told to say out of press releases.
"And someone like me, who says what I really think, is supposed to be quiet and not speak the truth. And I will not be silenced."
John Prescott, the deputy leader of the party, said she had accepted the collective responsibility of the Shadow Cabinet.
He added: "I think everyone of us in the Shadow Cabinet likes to speak their minds on occasions. I have been known to do it myself. But there is Shadow Cabinet responsibility and all of us have to take that into account. And I am reassured that Clare, in her view, actually put forward the collectively responsible policy of the Shadow Cabinet.
"She has made that clear. She has been somewhat annoyed at the mischievous way her remarks have been interpreted in the press.
"Clare has made one or two personal remarks about her own personal situation. She is entitled to make a personal remark."
"Tony Blair has a serious problem on his hands," said a spokesman for Conservative Central Office.
"He either has to tell the truth about Labour's tax plans or sack Clare Short.
"People want to know what taxes they will have to pay under a Labour government. He has to tell the truth. Middle income families, all families, want an answer," the spokesman added.
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