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 on Wednesday night, 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.
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 he will say that Labour was well aware there was "absolutely no prospect" of achieving a real-terms cut.
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.
Among the Conservative high command, however, the concern will be the damage done to Mr Cameron's authority by a defeat which revived the spectre of the battles over Europe which tore the party apart in the 1990s.
Foreign Secretary William Hague said ministers would "hear and take notice" of what Parliament had said but indicated that they would not change their negotiating position. He brushed aside suggestions Government had been weakened by defeat.
During an at times impassioned Commons debate on Wednesday night, 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.
However, Tory rebel Bernard Jenkin said the "volte-face" by Labour represented a "very big shift" in the politics of the country.
"Even the Labour Party can now sense the tide of opinion that is flowing against the EU amongst our voters," he said.
"This amendment is simply a cry of despair from the British people who want their elected representatives to say something to the front benches of both parties that have so betrayed the British people over so long."