Deputy Prime Minister Nick Clegg has warned Tory rebels who combined with Labour to inflict a damaging defeat on the coalition that they have "absolutely no hope" of achieving their goal of forcing the European Union (EU) to cut spending.
Fifty-three Conservative MPs - including two tellers - defied the whips and joined Labour in supporting a rebel Commons amendment demanding ministers seek a real-terms cut in the next seven-year EU budget for 2014-20. The announcement of the 307 to 294 vote defeat for the coalition - its first of significance since assuming power in 2010 - was greeted with loud cheers by Eurosceptics on the Tory benches.
However, a furious Mr Clegg has turned his fire on Labour, angrily accusing them of a "dishonest" and "hypocritical" change of policy for short-term political advantage. In a speech to be delivered to the Chatham House international affairs think-tank - not normally the scene for such nakedly partisan political attacks - he will say that Labour was well aware there was "absolutely no prospect" of achieving a real-terms cut.
Earlier, a jubilant shadow chancellor Ed Balls - the target of much of Mr Clegg's anger - described the result as a "humiliating defeat" for Prime Minister David Cameron.
However, the Liberal Democrat leader insists that, with the majority of the 27 member states net recipients from the EU budget, he and Mr Cameron were "absolutely united" in the view that the best strategy for Britain was to press for a real-terms freeze, with the budget continuing to rise with inflation.
He said that under the proposals backed by Labour, failure to reach agreement next month in Brussels would mean the reversion to one-year budgets which would be even more costly to the UK.
"Their change of heart is dishonest, it's hypocritical. And worst of all, Labour's plan would cost the taxpayer more, not less," he is expected to say. "Because in pushing a completely unrealistic position on the EU budget - one that is miles away from any other country's position - Labour would have absolutely no hope of getting a budget deal agreed."
During an at times impassioned Commons debate, veteran Tory Sir Tony Baldry appealed to Conservative MPs to rally behind Mr Cameron and not to undermine him in the way that Sir John Major was.
Mr Baldry said rebels needed to "get a grip" or risk forcing the Tories out of power in a repeat of the internal conflict over Maastricht under John Major. He told BBC Radio 4's Today: "The only person who is really chuckling this morning is Ed Miliband and the Labour Party who think they've got a presentational coup,"
But one of the rebels, Sarah Wollaston, insisted she was reflecting the views of a party that was united on Europe, saying: "On the issue of Europe and its spending, the Conservative Party is united and I think all this reporting we have today about divisions in the Conservative Party astonishes me because the Conservative Party is not divided on Europe. We absolutely back the Prime Minister but we want to send him to Europe with a really hard message about what they are doing and how they are spending our money."