David Cameron has withdrawn his support over plans to force MPs to declare how much they earn from jobs outside Parliament.

In a surprise last-minute decision, the Tory leader will order his frontbenchers to abstain during today's vote. The measure is the biggest remaining element of Gordon Brown's expenses reform package, which will be put before MPs this evening.

Mr Cameron said he supported the principle that MPs should declare earnings from outside Parliament. However, he argued that the plan in its current form "goes a bit far" and would mean that he would have to declare items such as a basket of strawberries in return for giving a speech at the Women's Institute.

The Tory leader said he would order his front bench to vote for the issue to be referred to Sir Christopher Kelly's Committee on Standards in Public Life, which is conducting a more wide-ranging review of MPs' expenses. This means any change is unlikely to be introduced for at least six months.

The Prime Minister was quizzed about his domestic woes - and yesterday's damaging Commons defeat over the Gurkha question - during a joint Downing Street press conference with his Iraqi counterpart, Nouri al-Maliki.

"As far as the day-to-day business of government, I just say to you we get on with it and we are dealing with the big issues and we are not going to be diverted," he said. Earlier, Mr Brown had chaired a meeting of the Cabinet which discussed swine flu and the recession.

Mr Brown was forced into a further retreat at lunchtime after the Government pulled a motion to lay down certain principles for the reform of the second home allowance

The move, to head off a possible defeat after Mr Cameron said he that would vote against the motion, will mean that the future of MPs' expenses will now be left entirely to Sir Christopher Kelly, the sleaze watchdog

Labour whips were this morning assessing the impact of Mr Cameron's decision to ask his front bench to abstain over the controversial issue of declaration of interests. It appeared likely that would bring on board some Labour MPs who were themselves inclined to withhold support from the Government.

But the Commons risks taking a series of contradictory votes later today, backing changes in principle while also pressing for delay.

Some 27 Labour rebels joined opposition parties to vote for a Liberal Democrat motion to give all Gurkhas who have served in the British armed forces equal rights of residence. Although the vote was not binding on the Government, the 21-vote defeat - extremely rare on an opposition motion - was a serious blow to the Prime Minister.

Mr Cameron said today: "The Government is rapidly running out of political authority. By refusing to recognise our obligations to the Gurkhas, the Prime Minister misjudged the public mood and also misjudged what was right."

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