Prior to Monday's second reading of the Finance Bill, Mr Darling narrowly avoided a backbench rebellion from Labour MPs by promising to conduct a review, compensate people who are losing between £2 and £4 a week and ensure the payments due would be backdated.

In a letter to another prospective rebel, treasury committee chairman John McFall, Mr Darling outlined his plans which pleased Mr Clarke.

Mr Clarke said: "I had taken to Westminster with me real life examples of hard working people in my constituency who were worse off financially.

``The evidence I had in my possession was overwhelming and sufficiently convincing for me to take a tough stance in support of people on low incomes."

The MP, who also represents Coatbridge and Chryston added: "I could not have supported the abolition of the 10p rate unless I was convinced that those people in the lowest income bracket were not going to suffer financially.

"The commitment given by the Chancellor to conduct a review demonstrated that the Government had in fact listened not only to my representations, but those of other Labour MPs.

"The Government have changed their minds and have moved their position substantially in respect of the compensation measures that will be introduced to offset the abolition of the 10p rate.

``This is a decision which I welcome and I now await the details of when and how the compensation measures will be implemented.

"The two main groups that need help are low paid workers without children and pensioners under 65. I am committed to keeping my constituents updated as and when the details of the compensation package unfold."

The second reading of the Finance Bill was passed by 298 to 223.