David Cameron has been defeated in the House of Commons for the first time as a majority Conservative Prime Minister, losing a vote on the purdah rules for the EU referendum by 27 votes.
With a Labour amendment then nodded through the Commons, it means the normal purdah rules, which ban the Government from taking part in the referendum in the final 28 days of the campaign, will be applied.
37 Tory rebels joined forces with Labour and SNP MPs to consign Government plans to defeat by 312 votes to 285.
Hilary Benn, Labour’s shadow foreign secretary, described it as a "humiliating defeat" for the Prime Minister.
“The Government should never have rushed through its flawed plans to play fast and loose with the rules on the referendum," he said.
Nigel Farage said Ukip's campaign would be separate from two existing No campaigns ahead of the 2017 referendum.Read the full story ›
A Conservative backbencher has warned of a "tidal wave" in Ukip support in the forthcoming EU referendum if the government presses ahead in what he claims is unfair financial backing for the Yes campaign.
Sir Edward Leigh is worried that rules in the Political Parties, Elections and Referendums Act 2000 allocate spending to political parties based on vote share at the last general election, meaning the No side could be vastly outspent.
Sir Edward told the Commons: "My problem, and I do think this is a really serious issue that needs to be addressed by the House - our problem is that the official Yes campaign could potentially have a funding pot of up to £17 million as opposed to a limit of £8 million for the No camp."
He added: "And that is a huge difference in resources and could well affect the outcome and even if it doesn't affect the outcome it will lead people to feel that this is not a fair campaign."
The Tory backbench rebellion on the EU referendum is gathering pace after a senior eurosceptic dismissed the government's assurances on purdah rules.
George Osborne had promised to "come forward with reassurances" to make sure "there isn't an unfair referendum".
However, Sir Bill dismissed these assurances, saying the issue raises a question of trust, and that suspending purdah would be "unfair on the voters" and a "retrograde step" for democracy.
MPs are now poised for a vote on the issue later today.
Alex Salmond has increased the chances of a backbench rebellion against the government today after he spoke up in favour of enforcing a purdah period ahead of the EU referendum.
In a Commons debate this afternoon, the former SNP leader said: "If it can be done in each and every general election, then it can be done in this referendum campaign."
Mr Salmond endorsed a rebel amendment to the European Union Referendum Bill which would impose restrictions on the government and civil service in the 28 days before the poll.
The government is facing a possible backbench rebellion over plans to drop purdah rules ahead of the EU referendum.
Anti-EU MPs want a period before the referendum in which government bodies are prevented from releasing reports or information which might sway the eventual vote, and are prepared to push the matter to a vote in the House of Commons.
In a debate today, Conservative backbencher James Gray argued that documents "which may well affect the outcome of the referendum, should not be published in the so-called purdah period of six to eight weeks before the referendum itself?"
In response, the Chancellor refused to agree to instate purdah, but said that ministers ensure there is not an "unfair referendum", while allowing "the Government to make the case for the outcome that is achieved and the vote it recommends".
David Cameron's mission to reform the EU treaty was given a significant boost today, as German Chancellor Angela Merkel said: "Where there is a will, there is a way".
The Prime Minister was in Germany for the latest part of his European charm offensive - though earlier in the day, in Poland, his views were not so well received.
Leaders in Poland are upset by plans to curb benefits for foreign workers.
ITV News Europe Editor James Mates reports:
German Chancellor Angela Merkel refused to rule out treaty change as she met with David Cameron in Berlin to discuss his plans to renegotiate the terms of the UK's membership of the European Union.
Germany's Chancellor Merkel pointedly refuses to rule out treaty change. "That has to be decided once matter of substance are sorted out".
Mrs Merkel said: "Of course we have the desire to work very closely together. We would like to be a part of the process that is going on in Great Britain at the moment and we would like to be a constructive partner in this process.
"I have also said wherever there is a desire there's also a way and this should be our guiding principle here as well."
David Cameron has met with Polish Prime Minister Ewa Kopacz in Warsaw as he continues his tour of Europe to lay out his plans for renegotiating the terms of the UK's membership of the European Union.
They agreed on issues including making Europe more competitive by strengthening the single market, cutting back red tape, ensuring fairness between euro-ins and euro-outs and more subsidiarity, respecting the sovereignty of Member States, a Downing Street spokesperson said.
On immigration and welfare, Kopacz also welcomed Cameron's "commitment to respect the principle of free movement."
"They agreed that there were issues concerning the interaction between free movement and national welfare systems that should be discussed further, the spokesperson said.
The pair also discussed the situation in Eastern Ukraine and agreed that the EU's existing sanctions must remain in force until the Minsk agreements are fully implemented.