MPs defied public outcry last night and threw out attempts to curb their generous second home allowances and rejected calls for tough new external audits on their claims.
They voted to keep the £23,000 a year additional costs allowance and retain the so-called John Lewis List that allows them to claim taxpayers' money for furniture, household goods and home improvements.
The vote by 172 to 144, a majority of 28, means MPs will still be able to make the maximum claim for items on the list. MPs also threw out attempts to impose a system of external "financial health checks" on their claims and extend spot checks on expenses by the National Audit Office.
Proposals to force them to provide receipts for all claims, no matter how small, were also voted down.
Instead, MPs backed a motion calling for a "rigorous internal system of audit" that would examine MPs' claims once every four years.
A string of senior ministers were among MPs voting down the reforms. They included Jacqui Smith, the Home Secretary, Andy Burnham, the Culture Secretary, Paul Murphy, the Welsh Secretary, and Shaun Woodward, the Northern Ireland Secretary. Gordon Brown did not vote.
Among the Tories voting to keep the second homes allowances unchanged were Sir Nicholas and Ann Winterton, who have been embroiled in controversy over their claims for a flat owned by a family trust.
The expenses vote sparked recriminations at Westminster last night. Conservatives accused the Government of "sabotaging" attempts to clean up expenses and claimed a string of senior ministers joined rebels in rejecting the reforms.
Sources said MPs became embroiled in shouting matches in the division lobbies as emotions ran high. Liberal Democrats blamed an "unholy coalition of Labour and Conservatives" for the vote.
A committee of senior MPs, chaired by the Speaker Michael Martin, had called for MPs' second homes allowances to be cut to a maximum of £19,600 a year and said they should not be able to charge for appliances, furniture and household improvements. Instead they recommended that MPs should get a daily £30 subsistence payment for attending sittings at Westminster.
But the recommendations were rejected, despite calls from all three major parties to accept them.
MPs had earlier voted to reject calls for an inflation-busting pay deal and threw out plans for a £1,950 package of top-up payments to bring their salaries up to comparable public sector jobs. Instead, they accepted government proposals linking their pay to a basket of public sector jobs that will limit their rise to 2.25 per cent this year.
Meanwhile, it emerged that more than one in four MPs, including a string of senior ministers, employ relatives on their taxpayer-funded payrolls.
The new register of members' interests showed that 176 out of the 646 MPs at Westminster have at least one family member on their staff and 10 employ two or more.
The list, released yesterday alongside MPs' declarations of outside earnings, showed that the practice is even more widespread than previously believed.
From the start of next month, all MPs must declare any close family members they employ using parliamentary allowances under new anti-sleaze rules.
The latest list includes two cabinet ministers. Jacqui Smith employs her husband Richard Timney as a senior research/parliamentary assistant on a salary of between £27,780 and £40,052. Hilary Benn, the Environment Secretary, employs his wife Sally Clark as a research/parliamentary assistant earning between £14,212 and £34,240.
The lucrative world of Westminster
John Prescott, former deputy PM
Registers earnings of up to £175,000, including advances of up to £140,000 for his autobiography and speaking fees of up to £10,000 a time.
Michael Howard, former tory leader
Mr Howard and his wife, Sandra, declare two Pacific cruises paid for by Saga. He gave speeches on board.
David Cameron, Tory leader
Given a Fortnum & Mason hamper and 12 silver goblets from Lord Harris of Peckham, a Tory donor, as well as more hampers from Mohammed Galadari, who owns a Dubai newspaper. He also received a silver tray from George Bush.
David Blunkett, Ex-home secretary
Earned up to £440,000 from outside interests, including up to £105,000 from The Guardian and Daily Mail for serialisation of The Blunkett Tapes.
William Hague, Shadow Foreign Secretary
Earned £360,000 from his advisory jobs, and from the after-dinner speaking circuit.
George Galloway, Respect MP
Earned up to £200,000 for media work, including up to £105,000 for TalkSport shows and up to £40,000 for presenting Big Brother's Big Mouth on Channel 4.
Ann Widdecombe, former tory minister
Earned up to £220,000 from media work and speeches. and a £100,000 advance for her third and fourth novels.