Tory MPs who had signed Early Day Motions seeking its extension found a string of reasons not to vote against the Government.
A Labour amendment to the Finance Bill, which would have extended the relief until April next year, was defeated in the Commons by 311 votes to 281, a Government majority of 30. The only Tory backbencher to abstain appeared to be John Wilkinson, MP for Ruislip-Northwood.
Dr John Marek, introducing the move for Labour, said that his party had accused the Government of an 'election gimmick' when the duty was lifted in January of this year.
The holiday had plainly not worked yet, house prices and the number of house purchases continuing to fall, he said. But, if extending the relief for a further period 'did give a kick-start to the housing market', the whole economy would benefit as people bought carpets, furniture and other household goods.
Tony Marlow, Conservative MP for Northampton, said that there were two main house-buying periods - the spring and autumn - and allowing the stamp duty 'holiday' to run on might boost a market that without the relief might have been even more depressed.
Sir Malcolm Thornton, MP for Crosby, who sponsored an Early Day Motion calling for extension of the holiday, said the construction industry and housing market could bring Britain out of recession. But the Chancellor had a difficult task balancing competing spending claims and he would accept the Government's judgement that it could not be afforded.
Sir Michael Neubert, MP for Romford, said that the tax should be abolished, while Sir Anthony Grant, MP for Cambridgeshire SW, said that it was vital to restore confidence to the housing market but he, too, recognised that public spending had to be kept under control.
George Walden, Conservative MP for Buckingham, in a speech dubbed 'brave' by Anthony Nelson, Economic Secretary to the Treasury, backed the Government's wish to end the relief next month, but on grounds that he said the Government would not like.
Subsidy of house purchase had 'deformed' Britain's economy and people's lives as they struggled to pay over-high prices for houses, Mr Walden said. The economy could not be brought to health by being led out of recession on the back of subsidised piles of bricks and mortar, and it was wrong for the Government to provide one-third of the education budget - pounds 8bn - in mortgage interest tax relief, and continue 'this mumbo jumbo about home ownership'.
Mr Nelson, replying to the debate, said that to extend the duty holiday to next April would cost pounds 430m, a significant sum. The money would have to come from additional borrowing, additional taxation or public spending cuts, and would inhibit the chances of cutting interest rates further - a key Government aim which would help both the economy and house purchase.
The holiday had brought some house purchases forward, and knowledge that the relief was ending in August would produce a further bunching of house purchases before then, he added.