The Government has seen off the first significant Tory rebellion of the Parliament over Europe, but 27 Tory rebels would have been enough to defeat David Cameron had Labour taken part.
Ministers won a crunch Commons vote by 288 to 97, majority 191, but not before concessions were promised over the rules for the European Union referendum campaign.
Backbench Eurosceptic MPs are furious the Government plans to suspend "purdah" rules during final days of the campaign. Normally the rules prevent the Government machine influencing voters in the final 28 days before a poll.
Labour abstained on the amendment from Tory MP Sir Bill Cash, which would have added purdah rules to the European Union Referendum Bill during committee stage scrutiny of the Bill.
There were 25 backers for Sir Bill's amendment, plus two tellers. The rebels include Liam Fox, the former defence secretary, and Steve Baker, the chairman of the newly formed Conservatives for Britain group which plans to campaign for an out vote.
Ministers have insisted the Government has no intention of being a major player in the referendum, leaving it instead to two official campaigns and political parties, but warn normal purdah restrictions would mean important day-to-day business with the EU would grind to a halt.
Europe Minister David Lidington offered concessions in the form of new amendments when the European Union Referendum Bill returns to the Commons at report stage in the autumn.
But it was not enough to persuade rebellious Tories who marched into the opposite lobby in support of Sir Bill's amendment.
Ministers had earlier conceded ground on the timing of the referendum, tabling a late committee stage amendment ruling out staging the poll next May on the same date as Scottish Parliament and Welsh Assembly elections.
Rejecting concessions offered by ministers during the committee stage debate, Stone MP Sir Bill said: "The problem that we've got here is that this situation that we're in now is not necessary and I speak more in sorrow than anger about this.
"And I have spoken to the Minister for Europe and we've had a good discussion as we always do and I was grateful for the fact that he did mention in his own letter that he was grateful for the constructive way in which these concerns were raised.
"But I have to say they haven't allayed those concerns."
He added: "I put it this way round - that ultimately it raises a question of trust and the problem that we have been faced with is that there are extremely sound reasons for the provisions in Section 125 (of the Political Parties, Elections and Referendums Act 2000, which guarantee purdah)."
Delivering his speech sitting down, having spent the previous four days in hospital, he went on: "It's not just about trust because we don't know what the outcome of these discussions and consultations we're being promised will be.
"What we do know is that doing a referendum in a manner which is unfair on the voters is a very, very retrograde step in the kind of democracy that we uphold."
Mr Lidington attempted to ease concerns on the Tory benches during the debate, after sending a letter to all Conservative MPs before discussions began.
He said: "It is vital that the British public and both sides in the referendum debate accept the referendum is being conducted fairly and that therefore everybody will feel they are able to accept the result.
"In those four weeks before polling day, Government will not undertake a range of activity that most would regard as the province of the campaign - such as issuing mail shots, running commercial advertising campaigns and emailing voters in one way or another.
"There are various ways this could be done, some colleagues have talked about a code of conduct, the opposition put forward what I thought was a constructive amendment which we welcome, but we think there are some technical problems with it.
"We could alternatively to a code of conduct provide for language on the face of the Bill to restrict Government activity to particular named forms of publication, or to prohibit the Government from taking part in specific forms of communication."
Mr Lidington added: "It is not our intention the Government should be a lead campaigner in the referendum and it is right the House should seek reassurance from us on this point."
In the debate, Tory former chancellor Ken Clarke said it was important the referendum must be "perceived to be fair".
He said: "I've never known a referendum settle any question. It certainly hasn't settled questions of Scottish independence, elected mayors, proportional representation, AV and doesn't seem to have settled the European question either.
"But those who believe a referendum is a valuable way forward I think would agree with me we should bend over backwards to make sure that all those who feel strongly on this subject, on both sides, are treated as fairly as possible."
Tory Bernard Jenkin (Harwich and North Essex) said: "This is not about Europe - it is about how to conduct a fair referendum."
Former Attorney General Dominic Grieve said in his view Section 125 could have properly been left in and the better course of action would have been for the front bench to devise an amendment to qualify it "if they really thought there was going to be a major problem with it during the purdah period in a run up to the referendum".
He added: "But the Government it seems to me has got itself into a bit of a hole."
Shadow Europe minister Pat McFadden said Labour did not oppose the Government's wish to suspend purdah, but called for clarity over what it intends to do or publish during the referendum period.
He said: "More clarity is needed than has currently been made available through ministerial statements.
"What form will expressing a view take and what form will it not take?
"The Government needs to provide more information and more clarity and more reassurance on this point."
SNP foreign affairs spokesman Alex Salmond endorsed Sir Bill's amendments. He said: "I hear from the Government they can't really function in a purdah period, that government won't be able to make representations to European Council, that it will be so impossible over the 28-day period.
"But that's what happens in each and every general election we have had. I didn't notice recently, in April and May, that the administration of this country ground to a halt - a lot of people thought it was better not having a fully activated government in the campaign period.
"If it can be done in each and every general election, then it can be done in this referendum campaign."