David Cameron has been dealt a damaging blow by his own party after Tory rebels combined with Labour to inflict a bruising defeat on his EU negotiating strategy.
A rebel Commons amendment calling on ministers to demand a real-terms cut in the EU budget was passed by 307 votes to 294 - a 13-vote majority.
An analysis of the division list showed 51 Conservative MPs, plus two tellers, defied the party whips to support the amendment.
The announcement of the result was greeted with loud cheers from the Tory benches.
Although it is not binding - simply requiring ministers to "take note" - the result will embolden Tory Euro-sceptics, threatening to re-open the bitter divisions over Europe which tore apart the party in the 1990s.
One leading Conservative rebel, Peter Bone, hailed what he called a "remarkable victory".
"Parliament spoke for the people," he said. "There was enormous pressure on colleagues to vote with the Government.
"It was a very significant victory for the people. It was because MPs have to face their constituents."
Among ministers, there was fury at the way Labour had, in their view, switched position to outflank the Government on its most vulnerable issue.
For Labour, jubilant shadow chancellor Ed Balls said: "This is a humiliating defeat for David Cameron which shows how weak and out of touch he has become."