Personal independence payment (Pip) is paid to people with long-term physical or mental health conditions and is not linked to the recipient’s savings or income.
In contrast, universal credit (UC) is means-tested and designed to help support the unemployed or low-paid people.
Urging MPs to back the bill, Disabilities Minister Sir Stephen Timms said: “If you can work, you should, if you need help into work, the government should provide it, and those who can’t work must be able to live with dignity.
“Those are the principles underpinning what we’re doing.”
The government said nearly four million households would see their income boosted by £725 over the next five years, as a result of increasing the universal credit standard allowance.
Despite the government’s climbdown last week, 47 Labour MPs still voted against the legislation and backed a rebel amendment tabled by York MP Rachael Maskell.
During a debate ahead of the final votes, Maskell called the bill an “omnishambles” which would result in different levels of UC to people depending on whether they had claimed before or after April 2026.
She asked if someone who came off universal credit as their illness subsided but then had a relapse and needed the benefit would be awarded a lower rate compared to what they had previously received.
Sir Stephen said the bill already protected people in the situation she had described.
However, Maskell pushed her amendment to a vote which would see those with fluctuating medical conditions receive the existing rate of UC, rather than the lower rate applied to new claimants. It was defeated by 334 votes to 149.
The Conservatives also tabled an amendment which would have made further changes including reducing payments for those with less severe mental health conditions and excluding some foreign nationals from certain benefits.
It was defeated by 416 votes to 103. In the final vote, MPs approve the bill by 336 votes votes to 242.
The changes to universal credit will apply across the UK while any measures relating to Pip apply in England, Wales and Northern Ireland.
Liberal Democrat MP Christine Jardine lost her role as the party’s Scotland spokesperson after she voted against a Conservative-led amendment to the bill.
A party spokesperson said the official position was to abstain, as “a vote against was effectively a vote to implement this shambolic bill in full”.
They added: “Instead Liberal Democrats voted to oppose the welfare Bill altogether. Christine decided to take a different view and therefore is no longer on the front bench.”
Eight other Lib Dem MPs joined Jardine in opposing the amendment, but none held senior roles in the party.