David Cameron has defeated a bid to grant a referendum on EU membership, despite the largest rebellion against a Tory prime minister over Europe.
The motion was defeated by 483 votes to 111, after all Tory, Lib Dem and Labour MPs had been instructed to oppose it.
In total 81 Tories are known to have defied the whips, while others abstained.
Labour leader Ed Miliband said the revolt was a "humiliation" for the prime minister.
"If he can't win the argument with his own backbenchers, how can the country have confidence that he can win the arguments that matter for Britain?" he said.
A Downing Street spokesman said many people who voted for the motion felt very strongly, and their views were respected.
"However, the government has to do what is in the national interest. The easy thing to do would have been for us to have avoided expressing a view. It was important to take a strong lead - because Britain's best interests are served by being in the EU."
The five-hour Commons debate on the issue was prompted after a petition was signed by more than 100,000 people.
The motion called for a referendum on whether the UK should stay in the EU, leave it or renegotiate its membership.
The government was expected to win easily - and even if it had lost, the result would not be binding on ministers.
This is by far the biggest rebellion Mr Cameron has suffered since entering Downing Street.
The previous largest Tory rebellion over Europe was in 1993, when 41 MPs defied John Major on the Maastricht Treaty.
Education Secretary Michael Gove insisted on Tuesday that the time was not right for a referendum to take place.
He told the BBC: "The most important thing is to make sure we get powers back, so we take more decisions here about employment, about growth, about jobs. These are critical issues.
"At the moment David Cameron is battling in Europe in order to make sure that we can have those decisions taken here. It may be that in the future as a result of the battle David Cameron is fighting for Britain that a referendum may be needed, but my judgement is that we need to get those powers back."
BBC political editor Nick Robinson says Mr Cameron will now face pressure to spell out what he means by promising "fundamental change" in the UK's relationship with Europe.
Conservative MP David Nuttall, who proposed the motion, argued there were more than 40 million people of voting age in the UK who had not been consulted on the question of Europe.
And he said the UK Parliament was becoming "ever more impotent" as the "tentacles" of the European Union "intruded into more and more areas of national life".
In a statement to the Commons, Mr Cameron said he shared the rebels' "yearning for fundamental reform", and promised "the time for reform was coming".
He insisted he remained "firmly committed" to "bringing back more powers" from Brussels, but on demands for a referendum, he said amid an economic crisis the timing was wrong and Britain's national interest was to be part of the EU.
"When your neighbour's house is on fire, your first impulse should be to help them to put out the flames - not least to stop the flames reaching your own house," he said.
Labour leader Ed Miliband, who saw 19 Eurosceptic MPs within his own party rebel, likened the Tories' divisions of Europe to a rerun of an old movie.
He called the Tories an "out-of-touch party tearing itself apart over Europe".
However, he did agree with the prime minister that it was the wrong time for a referendum.
"The best answer to the concerns of the British people about the concerns of the European Union is to reform the way it works, not to leave it," he added.
Tory backbenchers voiced their dismay at the three-line whip - the strongest order a party can give - on Conservative MPs, which meant any who voted against the government would be expected to resign from government jobs.
Conservative MP Stewart Jackson told the Commons he would vote for the motion "with a heavy heart" and "take the consequences", which may mean losing his position as parliamentary private secretary to Northern Ireland Secretary Owen Paterson.
He said he wished there could have been a well-informed reasonable debate, instead of "heavy-handed whipping" and "catastrophic management" by his party.
Fellow Tory MP Adam Holloway, a parliamentary private secretary to Europe minister David Lidington, rebelled and voted for the motion but said he still believed the prime minister was doing a good job.
'Piece of graffiti'
Anger was also directed towards Foreign Secretary William Hague, who earlier tried to quell the rebellion by calling the motion "a piece of graffiti".
Later in the Commons, he said a referendum would "add to economic uncertainty at a dangerous and difficult time" and suggested most British people did not want to "say yes or no to everything in the EU".
Tory MPs accused him of going native and abandoning his Eurosceptic views.
The Lib Dems came under attack too, accused of being "charlatans" by Conservative MP Philip Davies for abandoning a manifesto pledge for an in-out referendum on the EU.
But Lib Dem Martin Horwood insisted the party committed to an in-out referendum at the time of a fundamental shift (in Britain's relationship with the EU).
Deputy Prime Minister and Lib Dem leader Nick Clegg has said it is the worst time for a debate about Britain leaving the EU as a "firestorm" engulfs the eurozone.
One Liberal Democrat MP, Adrian Sanders, defied his party's leadership and voted for a referendum.
The UK Independence Party, which campaigns for the UK to quit the EU, said the Conservatives were "tearing themselves apart" over Europe. Its leader Nigel Farage had urged MPs from all parties "to vote with their conscience, ahead of their party or career".
In the coalition agreement, the Conservatives and the Lib Dems, a traditionally pro-European party, agreed to "ensure that the British government is a positive participant in the European Union, playing a strong and positive role with our partners".