Parliament’s reputation took another battering yesterday when MPs threw out plans to overhaul their expenses, insisting on their right to buy kitchens, televisions and sofas on the taxpayer.

Plans for rigorous external audits, a reduction of the threshold of receipts from £25 to zero and a ban on furniture or home improvements were all thrown out by MPs who voted against the plan by a majority of 28.

The Tories accused the Government of “sabotaging” attempts to tighten the system by rejecting a review that Gordon Brown had previously endorsed. The vast majority of MPs – 146 of the 172 – who voted to keep the allowance, described as the “John Lewis list”, were Labour, including 33 ministers.

There were bad-tempered scenes in the division lobbies, culminating in a shouting match between George Osborne, the Shadow Chancellor, and Ian Austin, Gordon Brown’s aide. Tory sources said that Mr Osborne accused Mr Austin of behaving in a shameful way while David Cameron was told to f*** off by a Labour MP.

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Tories later claimed that Mr Austin had said to Mr Osborne: “F*** off you toff.” Mr Austin said the remark was completely untrue, instead recalling that he said: “It’s all right for multi-millionaires.”

A number of Cabinet ministers, including Jacqui Smith, the Home Secretary, Shaun Woodward, the Northern Ireland Secretary, and Andy Burnham, the Culture Secretary, voted for the “wrecking” amendment to stop the reforms. The Prime Minister did not turn up to vote.

Andrew MacKay was the most senior Tory to vote against reforms, joining Sir Nicholas and Ann Winterton, who have recently been embroiled in a housing row. Half the Commons failed to vote.

The £24,000 allowance for maintaining a second home will now remain in place and the major elements of a six-month review, set up after the Tory MP Derek Conway was found to be wrongly paying his son, will be ditched. MPs will now be subject to internal checks, while more generous proposals for MPs’ offices were approved. London MPs will also get a new weighting allowance of £7,500.

The opposition to reforms was led by Don Touhig, a former minister, and driven through by Labour backbenchers. They said the reform package would mean external audits costing up to £1,200 a day. Mr Touhig also suggested the reforms provided too little for MPs. “I think most fair-minded people would accept that the extraordinary situation of an MP needing to live both in his or her constituency and London requires an allowance to support that cost.”

They argue that the need to make every receipt public, after the freedom of information ruling by the High Court, provides sufficient checks.

Earlier Mr Brown ensured that MPs voted for a below-inflation 2.25 per cent pay rise, which increased their annual salary from £61,820 to £63,211, and rejected moves to boost that with a £650-a-year “catchup” payment by ensuring that all of his frontbenchers voted with the Government.On expenses, the Prime Minister left Labour MPs to a free vote, unlike Mr Cameron, who insisted that the Shadow Cabinet voted for restraint.

Nick Harvey, the Liberal Democrat who drew up the reforms, said: “An opportunity to put our house in order and be seen to put our house in order has been passed up. They took all the nice bits but not the ones they didn’t like. They took the spoonful of sugar but refused the medicine.”

Even though MPs voted in favour of pay restraint, not one backbench MP in the Commons chamber spoke in favour of it, many expressing outrage that their salaries had fallen below equivalent roles.David Maclean, the Tory representative on the Members’ Estimate Committee, which called for a rise to £75,000, said that, as an MP for 25 years, he had seen many pay freezes which had done “a fat lot of good” in public opinion terms.

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