Nick Clegg has warned Tory rebels who joined forces with Labour to inflict a damaging defeat on the coalition they have "absolutely no hope" of forcing the European Union (EU) to cut spending.
Fifty-three Conservative MPs - including two tellers - defied 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, the coalition's first significant defeat, was greeted with loud cheers by Eurosceptics on the Tory benches.
Nick Clegg attacked Labour and warn Tory rebels they have 'no hope' in a Chatham House speech
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 delivered to the Chatham House international affairs think-tank - not normally the scene for such nakedly partisan political attacks - he said 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 Clegg's anger - described the result as a "humiliating defeat" for Prime Minister David Cameron.
The Deputy Prime Minister insists with the majority of the 27 member states net recipients from the EU budget, he and Mr Cameron were "absolutely united" in their determination to press for a real-terms freeze.
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 said.
"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.
"We've been waiting for years for the Labour Party to finally announce how they would cut spending.
"Now they have finally come out in favour of cuts but in a way they know is undeliverable; and in a way that would hurt British taxpayers. And it turns out even their cuts cost money.
"I've heard people describe it as clever opposition politics - and I suppose it is. But it's not the behaviour of a party serious about government."
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.
Although the vote is not binding, Eurosceptic rebels emboldened by their triumph made clear the Prime Minister could not afford to return from next month's crunch summit in Brussels with anything less than a real-terms cut.
"If the government comes with anything except a cut in the EU budget then they are not going to be able to get that through Parliament, and they are going to need to get it through Parliament in this case," said rebel ringleader Mark Reckless.
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.
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."