With former Cabinet ministers Norman Lamont and John Redwood sitting alongside in support, the Chingford MP said the increasingly political court had to be put in its place.
"We are ... witnessing a process of judge-made law which goes far beyond the traditional scope of the British national courts and cuts across the vital concept that law-makers should be fully accountable to their electorate," Mr Duncan-Smith told the House of Commons.
Though the MP's European Communities (European Court) Bill was rejected by 83 votes to 77, the significant figure was the 66 Tories who lined up to support a measure going way beyond government policy.
Earlier, at Question Time, Tony Blair had highlighted the influence of the sceptics as he exploited the mixed messages from Cabinet ministers over whether to retaliate or negotiate in response to the European Union ban on British beef.
"At some point in time, the Prime Minister will have to admit the brutal truth to himself that the business of his government is less designed at running an administration than appeasing the factions within the Conservative Party," the Labour leader said.
Stung by a series of ECJ judgments, including one allowing Spanish fishermen to claim up to pounds 30m compensation for being banned from British waters, ministers want to reform the court during the Inter-Governmental Conference. They will attempt to get an appeals system and to limit its powers to impose retrospective costs.
Mr Duncan-Smith's Bill would have amended the European Communities Act 1972 to give Parliament a right to review judgments and doctrines of the court and overrule those considered contrary to the original domestic legislation.
"The European Court is a political court and it sees its role as the architect of European integration," he said. German and French courts had powers to review ECJ rulings and Britain should do the same.
At stake was the question whether Parliament could make, break or amend its own Acts of Parliament, Mr Duncan-Smith said.
"Entrusted with the British rights and freedoms, it's whether we are content to do this or hand these over bit by bit to Brussels."
Opposing the Bill, Charles Kennedy, Liberal Democrat spokesman on Europe, pointed out that two British companies - Ladbroke and British Petroleum - had important cases on competition policy before the European Court. "If they win ... they will expect the rules to stick.
"But the rules would not stick, the rules would not even have a chance of being implemented in our favour or interpreted legally, if this Bill was passed," he said.
The Government's attempt to lift the beef ban via the European Court was a "classic example of wanting to have your cake - or, your beef, in this case - and eat it," Mr Kennedy said.
"When it suits them, they're willing to use what is available to them via the ECJ. When it doesn't suit, they're willing ... to tear up the entire basis of it."
The Conservatives should come clean, the MP said, adding: "If they want us out of Europe, which the passing of this Bill would be tantamount to, they should say so."Reuse content