A handful of Liberal Democrats threatened to vote no - but the government has seen off a challenge to its plans for a real terms cut in benefit payments.

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The government easily won a Commons vote on plans to limit the rise in working-age benefits to 1 per cent for the next three years, well below the rate of inflation. A Labour move to block the bill, and call for a compulsory jobs guarantee for the long term unemployed, was defeated by 328 votes to 262.

Earlier, the Work and Pensions Secretary Iain Duncan Smith defended the coalition's plans, saying it had inherited an "unsustainable and costly" welfare system, which left people trapped on benefits.

Mr Duncan Smith admitted that welfare spending had gone up by £14bn since 2010, but insisted most of that had gone on pensions. "This is all about getting the overall welfare bill down", he said. "The number one priority we face is reducing the deficit", he added, blaming Labour for leaving such high debts.

He accused Labour of spending taxpayers' money "like drunks on a Friday night, no care or concern for how effective it was."

The enemy within is not the unemployed, but unemployment. David Miliband MP

But shadow work and pensions secretary Liam Byrne said the bill was being rushed through parliament in what he called a "hit and run on working families".

Pointing to the official impact assesment which was published just before the Commons debate, he said it revealed who was being asked to pick up the bill for the Chancellor's "catastrophic economic failure."

There was an impassioned contribution from the former foreign secretary David Miliband, who said the "rancid" bill was nothing to do with affordability. "It reeks of politics, the politics of dividing lines that the current government spent so much time denouncing when they were in opposition, in the dog days of the Brown administration".

The enemy within, he said, was not the unemployed, but unemployment.

But the coalition is already facing a rebellion within its own ranks. At least two Liberal Democrat MPs say they will not support the benefits up-rating bill in the Commons vote this evening. Former minister Sarah Teather was the first to declare she would be voting with Labour, followed by fellow Lib Dem MP John Leech.

Ms Teather said she would vote against the bill "with a very heavy heart". And she took issue with the language the Tories had used in the debate, "Hammering on that faultline with the language of shirkers and strivers will have long term impacts on public attitudes...it will make society less generous, less sympathetic, less able to co-operate", she said.

David Ward, MP for Bradford East, hinted he might be the third to rebel, questioning any assumptions that unemployed people were jobless by choice. "I suspect there are far too many people on this side of the house that believe these are the deserved poor. It is not fair. I will not support it."

Mr Duncan Smith told MPs that Labour believed helping people meant trapping them in the benefit system, accusing them of creating a "ridiculous nonsense", and a tax credit regime which had wasted £4bn through fraud and error.

Unfairness claim

And he said it was unfair that those in work had seen their incomes go up far less than those on benefits.

But millions of families will be affected by the government's changes. The widely respected Institute of Fiscal Studies, which has analysed the impact, said half of all working-age households where someone was in work would lose an average of around £165 a year.

Two and a half million households where no-one is in work will see their entitlements reduced by slightly more; an average of £215 a year.

And it is not just oppositon MPs who are objecting to the whole principle behind the bill. A survey by the Unite union found that just 17 per cent of workers think the welfare cuts will make the system fairer.