A Cornwall Liberal Democrat MP has labelled the Government's so-called bedroom tax "immoral" and "Dickensian" as he rebelled against the Government.
Andrew George, MP for St Ives, said the controversial policy to crackdown on housing benefit would create the "ghettos of the future" as he was one of two Lib Dems to demand ministers abandon the policy.
A Labour-led Commons motion calling on ministers to end deductions for social tenants with spare bedrooms with "immediate effect" was defeated, but the Government's majority was cut to 26 in the vote.
Speaking during the debate, Mr George said: "This spare room penalty, or the bedroom tax, victimises the most marginalised in our communities, undermines family life, penalises the hard-working low-paid for being prepared to stomach low-paid work, masks the excessive cost and disruption to those disabled who have to move from expensively adapted homes and is in my view Dickensian in its social divisiveness. It is an immoral policy."
Mr George, who used to work in the social housing sector, said the "tax" will result in developers building smaller properties, which will result in "increased overcrowding in future".
He added: "If we go in that direction, we will end up with further ghettos. The ghettos of the future will be built as a result of this policy."
Under the Government's proposals, people in social housing will receive a cut in housing benefit where they are deemed to have spare bedrooms.
Ministers hotly dispute the term "bedroom tax" – arguing it is not a "tax" but a partial withdrawal of a state hand-out – calling it the under-occupancy penalty and argues it is tackling the chronic shortage of social houses.
Housing benefit will be cut by 14% for those deemed to have an extra bedroom and 25% for claimants with two or more spare bedrooms, even though ministers hope the changes will reduce the welfare bill by £500 million.
The National Housing Federation has said the move could affect around 19,000 households in Devon and around 9,000 in Cornwall and the Isles of Scilly.
Work and Pensions Minister Esther McVey received loud cheers from the Tory benches when she stood up to defend the policy in the Commons.
She said there were numerous examples of social tenants who were pleased to move in to smaller properties which were easier and cheaper to look after.
Ms McVey said: "We have 400,000 people in overcrowded accommodation. Unfortunately, the voices of nearly two million people on waiting lists have been shouted out.
"It's typical Labour – spend more, increase benefits and absolutely ignore the problem altogether."