Ed Miliband has accused David Cameron of pursuing a strategy of "divide and rule" after the House of Commons voted in favour of legislation to impose real-terms cuts on welfare.
Tuesday night's vote exposed tensions between the coalition parties, with four Liberal Democrat MPs - including ex-minister Sarah Teather - rebelling by voting against the Welfare Benefits Uprating Bill, while former leader Charles Kennedy abstained.
Mr Kennedy later said he wanted to see changes to the legislation, which caps benefit rises at a below-inflation 1% for the next three years, before it becomes law.
Charities which work with poor families voiced dismay at the outcome of the vote, which saw MPs give the Bill a second reading by a majority of 56, clearing the way for more detailed scrutiny in committee.
But Mr Cameron insisted the cap - branded a "strivers' tax" by Labour - was "fair" at a time when wages are increasing only slowly. In a message on Twitter, the Prime Minister said: "The Commons vote to limit benefit rises to 1% while pay is only rising at 1% is fair. Labour have the wrong priorities."
Work and Pensions Secretary Iain Duncan Smith told MPs that benefit levels had grown by 20% since the beginning of the recession, while incomes for those in work have risen by just 10%. He said: "What we are trying to do over the next few years is get that back to a fair settlement and then eventually it will go back onto inflation."
The cap, announced by Chancellor George Osborne in his Autumn Statement last year, is aimed at slashing £5 billion from the welfare bill over the next five years.
Mr Osborne has previously justified it by asking: "Where is the fairness... for the shift-worker, leaving home in the dark hours of the early morning, who looks up at the closed blinds of their next-door neighbour sleeping off a life on benefits?"
But Mr Miliband said the benefits debate marked "a fork in the road for the country", citing figures showing that almost 70% of those who will lose out from the changes are in employment.
"It's now clear what the Government's strategy is: it's a divide and rule strategy," the Labour leader told the Daily Mirror. "They haven't succeeded in the first two-and-a-half years so they want to point the finger of blame at someone else so it doesn't get pointed at them. And therefore they are trying to divide and rule. They are cutting taxes for millionaires while hitting low-paid people, those people whose curtains are open when George Osborne gets up and still open when he goes to bed."