Plans to redraw constituency boundaries before 2015, backed by the Tories, have been defeated in the House of Commons.
MPs voted by 334 to 292 to accept changes made by peers, meaning the planned constituency shake-up will be postponed until 2018 at the earliest.
It was the first time Lib Dem ministers have voted against their Conservative coalition colleagues in the Commons.
The two parties have been in dispute since proposed elections to the House of Lords were dropped last year.
Labour and Lib Dem MPs were joined by those of smaller parties - including the SNP, Plaid Cymru, the DUP, the SDLP the Greens and Respect - to defeat the proposals, giving them majority of 42.
Four Conservatives - David Davis, Philip Davies, Richard Shepherd and John Baron - also rebelled against their party.
Northern Ireland MP Naomi Long of the Alliance voted with the Conservatives, as did Nadine Dorries who had the Tory whip withdrawn after appearing on I'm a Celebrity ... Get Me Out of Here! last year.
A senior Lib Dem source insisted to the Press Association that the vote would not damage the coalition.
"Both sides of the coalition have known what the position is for months now. There are 101 other things the Government is doing and we will get on with those," the source said.
"This vote now draws a line under this issue."
Leader of the House of Andrew Lansley told BBC News that the coalition parties had "departed from each other on this specific vote" but would continue to work together until the next election.
"You come together in a coalition agreement, and if you live by that agreement together, then actually you can live with some of the disagreements that occur from time to time," he said.
The issue of boundary changes has been one of the biggest flashpoints between Prime Minister David Cameron and his deputy Nick Clegg since the two entered government together.
Parliament agreed in principle in 2011 to reduce the number of MPs and to redraw the electoral map to make all constituencies roughly the same size in terms of number of voters.
Some believe the proposals, which were backed at the time by both coalition parties, would help the Conservatives win up to 20 extra seats at a future election.
But a row over plans to reform the Lords - abandoned in the face of Conservative opposition - have since led the Lib Dems to say they will block implementation of the boundary review until after the next election, scheduled for 2015.
The Lib Dems have argued the proposals on the make-up of the Commons and the Lords were part of the same package of constitutional reforms put forward by the coalition in 2010 and accused Conservative backbenchers of not honouring the initial agreement.
But Conservatives insist that progress on the two issues was not linked and believe that Lib Dem government ministers should have voted in favour of the boundary proposals or resign.
During the Commons debate, Andrew Lansley said the attempt by peers to change the Electoral Registration and Administration Bill was a "democratic travesty" and an "abuse of parliamentary process" as it sought to "directly and dramatically intervene" in elections to the Commons.
He urged MPs to reject the changes made by peers, arguing that the plan to cut the number of MPs by 50 to 600 would save the taxpayer £13.5m a year.
"Major disparities" in the size of parliamentary constituencies also needed to be tackled, he said.
"The principle of greater equality in the value of each vote is at the heart of this boundary review," Mr Lansley told MPs. "There can be no justification for retaining the current inequality. I have heard no argument that changes this nor any justification for the Lords in seeking to do so."
Shadow justice secretary Sadiq Khan said Mr Lansley's criticism of the House of Lords was "breathtaking". He said the peers had made the change legitimately and it was "hard luck" for the Conservatives who had missed the opportunity to reform the Lords.
'Spite and pettiness'
Mr Khan told MPs delaying the review would mean "more time to address the deficiencies in the current electoral register".
Liberal Democrat John Thurso said he had been a supporter of the decision to go into coalition in 2010 and wanted to make the deal work, but he insisted the agreement with the Conservatives was "not a pick and mix menu".
A number of Conservatives MPs attacked their coalition partners for changing their position on the boundary review.
Tory Penny Mordaunt said the Lib Dems were motivated by "spite, pettiness and self-interest", accusing them of making "flirtatious glances" to Labour as potential coalition partners following the 2015 poll.
"The Liberals have exchanged their legendary sandals for flip-flops in the hope that it will enable them to keep their options open," she said.
Conservative Peter Bone said Lib Dem ministers should resign and "cross the floor of the House" for voting against agreed government policy.