British MPs voted in favour of the EU Referendum Bill - which paves the way for an in-out referendum on Britain's EU membership by the end of 2017 - by 316 votes to 53, meaning it will pass to the House of Lords for further scrutiny.
The first major defeat of the Cameron government in the House of Commons yesterday highlights the struggle the prime minister faces to keep eurosceptic rebels in his own party in line before the referendum.
Purdah is a long standing UK convention whereby governments refrain from making any major announcements 28 days in the run-up to general elections or other polls to avoid influencing their outcome.
Cameron had wanted to amend these rules but Opposition Labour teamed up with Cameron's own rebel Tory MPs to block the move by 312 to 285 and ensure the normal rules would apply.
Ministers agreed to restore purdah restrictions for the referendum but with certain exceptions to allow ministers and others to conduct day-to-day business with the 28-member EU during the campaign period.
"This is a humiliating defeat for David Cameron, with members from all sides of the House supporting Labour's approach to purdah, which ensures fairness in the conduct of the referendum campaign while permitting normal government business to take place," said shadow foreign secretary Hilary Benn.
"The government should never have rushed through its flawed plans to play fast and loose with the rules on the referendum," he said.
No date has yet been set for the referendum on Britain's membership of the European Union but Cameron has promised to hold the vote by the end of 2017.
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