Sir Keir Starmer has seen off a backbench rebellion over plans to cut the winter fuel allowance but the Government's majority fell to 120.
MPs voted 348 to 228 to axe the payment for all but the country's poorest pensioners, rejecting a Tory bid for the controversial policy to be blocked.
Just one Labour MP who had not already had the whip suspended voted against the government - Jon Trickett. Some 52 others, including seven ministers, had no vote recorded.
Work and Pensions Secretary Liz Kendall accused the Conservatives of “faux outrage” over the winter fuel payment.
The minister said: “I would say to the faux outrage of members opposite, the faux outrage of members opposite who left 880,000 pensioners, the very poorest, not getting the pension credit they’re entitled to.
“And I would urge all honourable members to work with us and their local councils to make sure pensioners get the money they’re entitled to.”
She also told the Commons: “As my right honourable friend the Chancellor (Rachel Reeves) and the Prime Minister (Sir Keir Starmer) have said, this is not a decision we wanted or expected to make, but when we promised we would be responsible with taxpayers’ money, we meant it, because we know what happens when members opposite played fast and loose with the public finances.
“Working people and pensioners on fixed incomes paying the price with soaring interest rates, mortgages and inflation.”
Amid simmering unrest in Labour ranks, Sir Keir addressed the Trades Union Congress conference in Brighton before the crunch Commons vote.
He tried to defuse the anger among some delegates by stressing a “more prosperous, secure and dynamic country... is at the end of the tunnel”. But Labour rifts were laid bare with veteran Left-winger Diane Abbott launching a stinging attack on the new Government.
The MP for Hackney North and Stoke Newington told BBC radio: “It’s wrong to play games at the expense of the poorest pensioners just to look tough.”
“I would just ask the Government not to rule out the possibility of a higher threshold or indeed a taper of winter fuel allowance because our experience in Greater Manchester is that pensioners are often reluctant to apply for the pension credit,” he said.
From this autumn, older people in England and Wales not on pension credit or other means-tested benefits will not get winter fuel payments, worth between £100 and £300. Ms Reeves insists the measure is needed to help plug an alleged £22 billion black hole in the public finances which Labour claims was left by the Tories. Ex-chancellor Jeremy Hunt has flatly denied this.
Sir Keir also signalled that tighter public pay settlements were in the pipeline despite finding funds to end strikes by junior doctors and train drivers.
“I do have to make clear... that this Government will not risk its mandate for economic stability, under any circumstances,” he stressed.
Business Secretary Jonathan Reynolds also made clear that there will likely be tax rises, as well as more public spending cuts, in the Budget next month.
Rejecting claims that some pensioners will die of cold because of the fuel payment cuts, he said: “The state pension this year is higher than last winter and energy bills are lower.” Latest figures pointed to the state pension rising by £460-a-year in April under the so-called “triple lock”.
But Unite union general secretary Sharon Graham has accused Labour of deciding to “pick the pocket of pensioners” and called instead for a wealth tax to raise funds.
At the TUC, Sir Keir promised new workers’ rights and better industrial relations with businesses. “I make no apologies to those, still stuck in the 1980s, who believe unions and business can only stand at odds,” he said.
