The Commons vote on the sale was 307-275, a Government majority of 32, with only two Tory MPs failing to support Mr Portillo. Cyril Townsend (Bexleyheath) voted against and Julian Brazier (Canterbury) abstained.
However, there were strong suspicions among Labour MPs that the concessions were re-inforced by heavy Treasury pressure. Senior Conservative sources said Kenneth Clarke, the Chancellor, had warned Mr Portillo before the debate that decisions on major procurement schemes would be held up until the sale of the defence houses was clarified.
The Cabinet has delayed decisions on the pounds 2bn replacement for the Nimrod reconnaissance aircraft and two missile orders. The decisions could be taken at the Cabinet's overseas policy and defence committee tomorrow and an announcement that would mean thousands of jobs is due.
Mr Portillo told the rebels that the sale and lease-back contract for 58,000 MoD homes would ensure families of armed forces members were consulted before the new owners could release more houses for sale by moving their present tenants to "comparable" accommodation.
The quality of local schools would be taken into account before accepting a transfer of sites and, if the new owners proposed to redevelop a site after 25 years of the lease had expired, the Government would insist on four years' notice.
The defence secretary also pledged "there will be no more mixing of civilian families among service homes ... so as to maintain the security and mutual support of the patch".
Mr Brazier, who led the threatened rebellion, said after the vote that he was "still deeply concerned about the long-term implications" of the sale, but that he recognised that ministers had listened to MPs on the short-term issues.
As other potential rebels indicated they would support the Government, only Mr Townsend held out. He said it was a "cheap-jack argument" for Mr Portillo to say the only way to pay for the pounds 100m refurbishment of the homes was to sell them.
Sir Patrick Cormack expressed concern that the houses should be sold to a British buyer, but voted with the Government, as did Nicholas Winterton - who signed a Commons motion opposing the sale - and Quentin Davies.
Mr Portillo would only say that each bidder had a British element. A Japanese bank is the front runner to buy the homes.
David Clark, Labour's defence spokesperson, said the deal was bad for forces families.Reuse content