The government has won a vote on its benefits bill by 75 votes, but only after offering huge last-minute concessions to Labour rebels.

The government had already watered down its plans once by reversing cuts to universal credit and protecting current claimants of personal independence payment (Pip) from stricter eligibility rules.

However, some Labour MPs were still concerned the new criteria for claiming Pip would come into force before the recommendations of a review could be implemented.

Fearing a humiliating defeat in Parliament, the government announced another U-turn, telling MPs it would not change Pip rules until it had time to consider the review’s conclusions.

The eleventh-hour changes leave the government’s Universal Credit and Personal Independence Payment Bill gutted of its most significant measures.

It also puts pressure on the Treasury’s spending plans, as potential savings of around £5bn will now be delayed or lost entirely.

Speaking after the vote, Work and Pensions Secretary Liz Kendall said: “I wish we had got to this point in a different way.”

She said there were “lessons to learn from the process” but defended the bill arguing it put in place “really important reforms” to help those who can, back into work.

Following a tumultuous few hours in Parliament, MPs voted by 335 votes to 260 to give the bill their initial approval. The result saw the government’s working majority cut from 165 to 75.

MPs will continue to scrutinise the bill when it returns to the House of Commons on Wednesday 9 July.

Minister had hoped changes made last week had convinced wavering rebels to back the bill, but during the debate many still expressed concerns.

Less than two hours before the final vote, disability minister Sir Stephen Timms told MPs the government was making further compromises, by removing sections of the bill which would have introduced new Pip eligibility rules.

“We will move straight on to the wider review and only make changes to Pip eligibility activity and descriptors following that review,” he told MPs.

Several MPs expressed frustration at the last-minute changes. Labour MP Paula Barker said: “Whilst grateful for the concessions, this has further laid bare the incoherent and shambolic nature of this process – it is the most unedifying spectacle that I have ever seen.”

Labour’s Mary Kelly Foy told MPs: “I popped out for a banana earlier on and, when I came back in, things had changed again. So I’m even more unclear on what I’m voting on.”