Labour has been defeated in its efforts to block controversial plans to freeze age-related income tax allowances for pensioners.
MPs voted by 298 to 231 in the House of Commons on Thursday against Labour's proposal to drop the plan announced in last month's Budget.
Shadow chancellor Ed Balls had said the move was "one of the most unfair policies" announced by Chancellor George Osborne, but the coalition claims it will save £1bn by 2015.
Currently, pensioners earning less than about £24,000 a year get a more generous tax-free allowance than people of working age.
Individuals aged between 65 and 74 can earn £10,500 before paying income tax, while those aged 75 or over have a £10,660 allowance.
This compares with an allowance of £8,105 for other workers.
However, from next year, the government plans to freeze those allowances for anyone already aged 65, and scrap them altogether for anyone who turns 65 after 5 April, 2013.
The move has been dubbed a 'granny tax' as it will mean pensioner income will not increase in line with inflation after that date.
Balls said before the Commons vote: "How can it be right that millions of pensioners are asked to pay more so that millionaires can pay less?"
Paul Bruns and Elaine Parkes
3,000 left to transfer
Record numbers of people aged 90 plus
From 3 to 10 October