The Government has defeated a King’s Speech amendment calling for the two-child benefit cap to be scrapped.
The House of Commons voted 363 to 103, majority 260, to reject the amendment tabled in the name of SNP Westminster leader Stephen Flynn.
Slow handclapping could be heard in the chamber after the result was announced.
Mr Flynn said: “Tonight, the Labour Party has failed its first major test in government.
“Labour MPs had the opportunity to deliver meaningful change from years of Tory misrule by immediately lifting thousands of children out of poverty – they have made a political choice not to do so.
“This is now the Labour government’s two-child cap – and it must take ownership of the damage it is causing, including the appalling levels of poverty in the UK.”
Ahead of the vote, Prime Minister Sir Keir Starmer said there is “no silver bullet” to end child poverty but acknowledged the “passion” of Labour MPs who were considering rebelling over the continuation of the Tory measure.