Shadow chancellor John McDonnell has admitted a huge Labour row over his U-turn on the Charter for Budget Responsibility is "embarrassing" as the plans cleared the Commons.
George Osborne saw his amended charter, which commits the Government to an overall surplus by 2019, agreed by MPs by 320 votes to 258, majority 62.
But the 90-minute Commons debate was overshadowed by a bitter internal Labour argument which is thought to have resulted in around 30 MPs defying orders to oppose the charter.
Around 45 Labour MPs are expected to have stayed away from the Commons lobbies but around 15 have permission under the normal rules.
And in the Commons Mr McDonnell admitted the public row had been "embarrassing" but told MPs: "A bit of humility amongst politicians never goes amiss.
"When the circumstances and judgments change it is best to admit to it and change as well."
Moving the new charter, Mr Osborne told MPs: "The position adopted by Labour on this measure sends the wrong message to the general public.
"The people who suffer most when governments lose control of the public finances are precisely the most vulnerable in society, they are precisely the people who lose their job, who get cast out of work.
"It's not the trade union barons who lose their jobs when the economy fails. It's not the richest in society who pay the price, it is the poorest in society and it is the most progressive thing a government can do to run a sound fiscal policy and provide financial stability to the working people of this country."
Mr Osborne added: "The truth is running a deficit forever is not socialist compassion it is economic cruelty and Britain wants no more of it."
Mr McDonnell accused Mr Osborne of changing the economic targets he sets.
"It is difficult to take seriously the charters and mandates when time after time the Chancellor has come to Parliament to revise his own charter," he said.
The shadow chancellor also announced a review of potential expansion of the remit of the Bank of England's Monetary Policy Committee (MPC), which is in charge of setting interest rates and meeting the inflation target.
It will be led by former MPC member Professor David Blanchflower and will be part of Labour's "radical project".
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