David Cameron has sought to head off a damaging backbench revolt over Europe as the Government tabled changes to the rules on the promised referendum on Britain's EU membership.
Ministers said amendments to the EU Referendum Bill would restore the "purdah" rule - which bars the use of public money to promote one side in the final four weeks before a poll - following an outcry from Tory Eurosceptics.
However Conservative critics warned the changes did not go far enough and left "too many loopholes" which ministers could exploit in order to use the government machine to campaign for a vote to remain in the EU.
With Labour also warning that it "may well" vote against the amendment when MPs return to Westminster on Monday following the summer break, it leaves the Government facing a possible Commons defeat.
The decision to reinstate the purdah provisions comes just a day after Mr Cameron agreed to change the referendum question in line with the Electoral Commission's latest recommendation that voters should be asked whether they want the UK to "remain in" or "leave" the EU, rather than ticking a Yes or No box.
Ministers had previously argued that lifting the purdah rules was essential to enable them to carry normal business with Europe during the referendum.
However a "business as usual" provision in the amendments will allow them to continue comment on European business such as statements by the European Council or rulings by the European Court of Justice.
A further new clause will enable ministers to bring forward further modifications to allow them to communicate on the referendum using "normal communications channels", subject to parliamentary approval.
Europe Minister David Lidington said the changes would ensure ministers could continue to "fight Britain's corner" in Brussels while communicating a position on the referendum in "restrained and moderate terms".
"We are absolutely determined to make sure that the referendum is seen by both sides as fair," he said.
However veteran Tory Eurosceptic Sir Bill Cash said that the amendments were "unsatisfactory" and that he would be looking to see what ministers said before deciding which way to vote.
"They fall very far short of what we had been given to expect. This has too many loopholes. It doesn't specify what the exemptions (to purdah) would be," he said.
Labour was studying the detail of the proposed changes to the legislation, but a source warned that they "may well" decide to vote against them.
SNP international affairs spokesman Alex Salmond said Mr Cameron had "caved in" in the face of backbench pressure and his party would now be pressing amendments to ensure ministers could not simply ignore purdah as they had in the Scottish independence referendum.
The latest amendment comes after Mr Cameron survived a Commons revolt of 27 Tory MPs - including five former cabinet members - in June over the plan to drop the purdah rule.
In July, the all-party Commons Public Administration and Constitutional Affairs Committee warned purdah was "completely unacceptable" and the Government had to be seen to conduct itself "properly, fairly and impartially" in the run-up to the poll.