George Osborne has vowed to take on the House of Lords over the constitutional crisis sparked by the devastating blow peers inflicted over plans to cut tax credits.
The Chancellor, who will face MPs later in the wake of a double defeat on the reforms, made clear that action will now be taken to rein in the upper chamber.
Details of a “rapid review” order by David Cameron after peers defied a century-old convention not to block financial measures approved by the Commons are expected to be set out today.
Mr Osborne said he and the Prime Minister were “clear” that the consequences of the defeat would “need to be dealt with”.
Peers backed two motions delaying the cuts following a series of impassioned speeches warning of the impact the changes would have on the poorest families.
The Chancellor, who will appear at the despatch box for Treasury questions and is also facing calls to make a full statement on the debacle, was forced to announce he would set out plans in the Autumn Statement next month to soften the blow for claimants hit by the reforms.
He said: “David Cameron and I are clear that this raises constitutional issues that need to be dealt with.
“However, it has happened, and now we must address the consequences of that. I said I would listen and that’s precisely that I intend to do.
“I believe we can achieve the same goal of reforming tax credits, saving the money we need to save to secure our economy, while at the same time helping in the transition.
“That is what I intend to do at the Autumn Statement. I am determined to deliver that lower welfare, higher wage economy that we were elected to deliver and the British people want to see.”
Peers were accused by Tories of a “constitutional outrage” after they ignored warnings about the primacy of the elected House of Commons.
A No 10 spokesman said: “The Prime Minister is determined we will address this constitutional issue. A convention exists and it has been broken. He has asked for a rapid review to see how it can be put back in place.”
Mr Osborne’s political reputation has been left badly dented after he failed to see off the drubbing in the Lords despite stark warnings from across his own party in recent weeks about the impact the measures would have.
Conservative former chancellor Lord Lawson was among those who called for the reforms to be tweaked.
“The great harm, or a great deal of the harm, is at the lowest end and that is what needs to be looked at again,” he said. “That is what concerns me.”
Labour’s John McDonnell said people had been “shocked” by the way the Chancellor had pushed ahead with the changes, which will slash £4.4 billion from working tax credits and child tax credits for some of the country’s poorest households.
The shadow chancellor said the result showed it was time for a “full and fair reversal” of the policy.