Round One: Blair scrapes to victory Round Two: Now Lord Hutton awaits

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Tony Blair narrowly avoided a catastrophic defeat last night over his plans to allow universities to charge top-up fees. The government majority of 161 was slashed to just five as more than 70 Labour MPs voted against the proposals.

The Prime Minister managed to survive after Gordon Brown intervened to prevent an even bigger revolt. In a telephone call yesterday morning, the Chancellor persuaded Nick Brown, a close ally but a ringleader of the rebels, to drop his opposition to the Higher Education Bill only hours before the knife-edge vote. His surprise switch proved decisive as the Commons gave the Bill a second reading by 316 votes to 311, the Government's smallest majority and the biggest revolt on a domestic issue since Mr Blair came to power in 1997. A total of 72 Labour MPs voted against the Bill and 19 abstained. One Tory MP voted with the Government and two Tories abstained.

The Independent has learnt that Mr Blair had drawn up an extraordinary plan to overturn the Commons vote if he had been defeated. He intended to table a motion of confidence in the Government next week, which would also have endorsed its proposals to reform higher education funding.

Although the move would have angered the rebels, the Prime Minister calculated they would have backed down because defeating the Government in a formal confidence vote could have triggered a general election. The secret plan reveals Mr Blair's utter determination to force through variable top-up fees at all costs.

The Chancellor was aware of the fall-back plan, dubbed "the nuclear option" by Blair aides. MPs close to Gordon Brown claimed he had "rescued" the Prime Minister, saying his intervention had entrenched his position as a powerful leader-in-waiting. He also persuaded two other rebels to back the Bill and another to abstain.

But Blair allies insisted the secret plan had persuaded the Chancellor to put enormous pressure on Nick Brown to perform his surprise U-turn. "Tony did not blink; he saw off the rebels. They blinked first," said one Blair aide.

Last night's wafer-thin majority gave Mr Blair a reprieve on the eve of today's long-awaited report by Lord Hutton into the death of the government scientist David Kelly. Last night The Sun newspaper claimed it had a leaked copy of the report, which appeared to clear the Government.

Yesterday's narrow vote calls into question Mr Blair's authority. Until Nick Brown changed sides, there were grave concerns in Downing Street that Mr Blair would suffer a defeat which would have provoked speculation that he would stand down before the next general election.

The outcome of the critical vote was still on a knife edge as MPs voted at 7pm. Mr Blair and six cabinet colleagues were meeting rebels on a one-to-one basis to plead for their support right up to the vote.

There was immediate controversy over the Government relying on the votes of Scottish Labour MPs, even though the Bill will not apply north of the border. Tim Yeo, the shadow Education Secretary, said: "It is completely wrong that a Bill which imposes higher charges on students attending the English universities should only be carried by this House using the votes of Scottish MPs when the students attending universities in the constituencies of those Scottish MPs do not have to pay those higher charges."

Charles Kennedy, the Liberal Democrat leader, warned it could prove to be a "hollow victory" for the Government. "Nobody has emerged from this shabby compromise with any credit. It took a dodgy deal between the Prime Minister, the Chancellor and backbenchers to get this Bill through," he said.

The rebels warned they would put the Government under pressure to make further changes to the Bill during its passage through Parliament. But Mr Blair, who will be relieved the measure has cleared its most important hurdle, will try to relaunch his reform agenda in a speech on public service reforms tomorrow.

Although Mr Blair survived, the huge rebellion will lead to demands for him to change his "top-down" style and rebuild his strained relationship with the Parliamentary Labour Party. Many Labour MPs were furious that the proposal to allow universities to charge up to £3,000 in top-up fees was brought forward without consultation.

Nick Brown, a former Labour chief whip, said he had won a string of last-minute concessions but, amid confusion at Westminster, his claim was denied by Downing Street, which was desperate to avoid the charge that Mr Blair had diluted reforms to win parliamentary support.

The former chief whip hailed a promise from the Chancellor of more money for higher education in a new three-year government spending blueprint to be published in July. But No 10 insisted "no new money" was on offer. Nick Brown also welcomed news that a report would be published next year on the impact of top-up fees on graduates entering public sector jobs, including medicine, saying that would help people on middle incomes who would not benefit from maintenance grants for poorer students. Downing Street said that process was already under way.

Blair aides also denied that the apparent concessions were offered yesterday, saying they were "on the table" when Nick Brown met the Prime Minister on Monday, and that he had rejected them after consulting fellow rebels. "What was rejected on Monday was accepted on Tuesday after Nick spoke to Gordon," one insider claimed.

Barbara Roche, another rebel leader who backed down as the vote approached, said the Government had made "significant concessions". She added: "I think that the independent commission is clearly going to be able to look at the whole thing again."