Keir Starmer has suffered a major rebellion on cuts to disability benefits - despite a U-turn just minutes before a crunch vote.
In a bid to save the welfare bill, the PM offered rebels a new concession on Personal Independence Payment (PIP) - a key disability benefit.
In a key vote on Tuesday evening, MPs voted by 335 to 260 - a majority of 75 and well below Labour working majority.
Under a U-turn announced 90 minutes before voting began, it was announced changes to restrict PIP would be delayed until after a review by DWP minister Sir Stephen Timms.
Sir Stephen told MPs that the Government had listened to the concerns raised about the timing of the changes in shambolic scenes in the Commons.
Tuesday's changes leaves the government's welfare reforms in tatters with any future savings uncertain as the scale of the squeeze on PIP is now unclear. The latest concession follows a partial U-turn last week in the face of a possible defeat.
MPs hit out at the "shambolic" nature of the government concessions while the left-wing Labour MP Ian Lavery responded: "This is crazy, man." The Labour MP Mary Kelly Foy added in the chamber: "I popped out for a banana earlier on, and when I came back in things had changed again, so I'm more unclear on what I'm voting on"
It followed frantic behind-the-scenes negotiations as a series of Labour MPs and rebels spoke out about the welfare cuts during a debate in the Commons. Labour rebel Rachael Maskell described the cuts as "Dickensian", adding they "belong to a different era and a different party".
Ms Maskell, who proposed an amendment to block the measures in the bill, added: "They are far from what this Labour Party is for: a party to protect the poor, as is my purpose, for I am my brother's keeper.
"These are my constituents, my neighbours, my community, my responsibility, and I cannot cross by on the other side."
In a powerful moment during the Commons debate, the disabled MP Dr Marie Tidball was close to tears as she described the impact of austerity on disabled people. She said she "vowed then that I would do all I could to create a country which treats disabled people with dignity and respect".
On the welfare bill, she went on: "With a heavy, broken heart, I will be voting against the bill today. As a matter of conscience I need my constituents to know I cannot support the changes as currently drafted on the front of the bill."
Commons Work and Pensions Committee chairwoman Debbie Abrahams described the bill as a "dog's breakfast". And rebel Emma Lewell told her Labour colleagues voting for the bill would "haunt" them.
Pleading with MPs, she said: "For those on my own benches, stay loyal to your party today, it may feel good in this place, but once you go home, once you're in your individual constituency the reality of this will hit, and it will hit very hard."
Referring to the Tories' welfare-cutting bill a decade ago, she added: "Just like in 2015 constituents will never forgive - and it will haunt those MPs who voted for it."
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