George Osborne has insisted that he will not cut the state pension as he looks to plug a £4 billion 'black hole' in his Budget.
During a debate with MPs, the Chancellor reiterated the Government currently has no plans to make further welfare savings to replace the continued PIP spending.
But he launched a defence of the benefits available to pensioners amid suggestions they need to be reduced to spread the impact of the cuts.
Labour's John McDonnell has said George Osborne is "unfit" for any leading office in government for his "grubby manipulations" in response to his disability benefit U-turn.
Speaking to MPs during the Budget debate, the Shadow Chancellor said the Tory budget process is in "absolute chaos" and urged the Government to rip up its fiscal plan and start again.
"PIPs are the benefits that for many disabled people actually make life worth living."
He added: "The Chancellor was willing to cut away this vital support to some of the poorest and most disadvantaged people of our community. Do not tell us we're all in this together."
The Chancellor has refused to apologise for attempting to introduce "upsetting" cuts to disability benefits before doing a U-turn on the plans.
George Osborne insisted he had listened to and learned from concerns about the cuts to the personal independence payment (PIP) and dropped the proposal.
But he did not accept former shadow chancellor Chris Leslie's invitation to say sorry for the mistake which left a £4.4 billion hole in the Budget.
Mr Osborne has taken the unusual step of opening the final day of debate in person so that he could respond to widespread concerns following ain Duncan Smith's dramatic resignation from the Cabinet.
George Osborne has defended his position as Chancellor as MPs prepare to vote to approve his Budget.
Mr Osborne told the Commons that if Britain wanted to build a "strong and compassionate society" the country had to live within its means.
"We have to back business to create jobs and we have to make sure work pays by putting more money into the pockets of working people."
The Chancellor also used his opening remarks to pay tribute to Ian Duncan Smith, who resigned as Work and Pensions Secretary last week over planned controversial cuts to the welfare budget.
George Osborne is due to defend his Budget in parliament today following the government u-turn on welfare cuts.Read the full story ›
There have been repeated calls for George Osborne's resignation after his budget was left in disarray.
But this is not the first time the chancellor's budgets have hit trouble.
ITV News political correspondent Libby Wiener reports.
Mayor London weighs in on Iain Duncan Smith's resignation and the abandoned disability payment cuts on ITV's The Agenda tonight.Read the full story ›
Prime Minister David Cameron has tried to calm unrest in his party over the resignation of Iain Duncan Smith, the former worker and pensions secretary.
ITV News political editor Robert Peston reports.
Disability charities have welcomed the government's U-turn over planned cuts to the Personal Independence Payments, known as PIPs.
Michelle Mitchell, chief executive of the MS Society, said:
This will be a huge relief for thousands of people who rely on PIP for vital support to live independently and with dignity.
We hope this marks a watershed moment in Government welfare policy.
Mark Atkinson, chief executive of disability charity Scope, said:
We welcome the government's decision not to go ahead with previously planned changes to PIP.
Life costs more if you are disabled and these extra costs make it extremely hard for disabled people to pay the bills.
MPs wonder aloud whether the chancellor is 'too scared' to respond to an emergency question over his budget.Read the full story ›