Gordon Brown has dodged a humiliating defeat over the abolition of the 10p tax rate.

The Government's majority was cut from 65 to 43 after Labour MP Frank Field tabled an amendment to the Finance Bill that would have forced ministers to compensate everyone hit by the controversial scrapping of the income tax band.

The 10p rate for low earners was abolished in Mr Brown's last Budget as Chancellor in 2007, when the standard rate was cut from 22p to 20p.

In response to backbench pressure, Mr Darling has since raised personal allowances twice to help low earners, as well as boosting child benefit and pensions.

In the House, Mr Field insisted that action was welcome, but said half a million of the poorest households were still losing out to the tune of around £2-£3 a week.

He told Labour MPs: "The 10p is a denial of all that we have come into public life about, and this is our last chance before the General Election to rectify it."

Some 30 Labour MPs had originally said they would join the Tories and Lib Dems in backing the amendment, but only 18 finally did after intensive lobbying of potential rebels by the Prime Minister.

Treasury minister Stephen Timms said 90 per cent of those who lost out from the abolition of the 10p band had been fully compensated, and the average loss to those households who were still worse off was less than £1 a week.

He warned that the amendment would leave the Government unable to collect income tax this year and it would have to repay what had already been collected, saying: "The chaos doesn't bear thinking about."

© Independent Television News Limited 2009. All rights reserved.