Plans to change the way MPs are elected have cleared the first Commons hurdle.
A bill introducing a referendum on changing the voting system, changes to constituency boundaries and fewer MPs, was backed by 328 votes to 269.
Labour says the changes would affect Labour-supporting areas and said the bill was "political skulduggery".
Tory opponents of the referendum said it could cost £100m but deputy PM Nick Clegg said it would restore "people's faith in the way they elect their MPs".
Despite criticism, the bill passed with a majority of 59 and a Labour bid to kill it off was defeated by 347 votes to 254.
But there are still parliamentary hurdles ahead in the Commons and the House of Lords and some Tory MPs suggested they may rebel if changes were not made at later stages of the bill's passage through Parliament.
The bill must be approved within months if the referendum is to go ahead on the planned date of 5 May 2011.
It would ask voters if they want to switch from the first-past-the-post system for parliamentary elections to the alternative voting (AV) system - where voters rank constituency candidates in order of preference.
The referendum was a key part of the coalition deal signed by the Conservatives and Lib Dems in May. Most Conservative MPs, including Prime Minister David Cameron, are opposed to the change, but the party conceded the referendum as part of the power-sharing agreement.
Deputy PM and Lib Dem leader Mr Clegg opened the debate on the Parliamentary Voting System and Constituencies Bill saying the bill was "about the legitimacy of this House".
MPs had to deliver on a promise for a "new politics" which made the system "fairer" and put people "back in charge".
He said while there were differences between the Tories and Lib Dems about the AV referendum, the coalition partners "emphatically agree" that "the final decision should be taken not by us but by the British people".
But several Tory MPs stood up to challenge him on the referendum. Conservative MP Gary Streeter suggested there was "raging disinterest" among voters on the topic. He said he feared it would mean an "outright Conservative government" would never be voted in again.
Conservative MP Eleanor Laing said she had to support the Bill as a "matter of honour" to fulfil the coalition agreement but added "what a high price we have to pay" for a stable coalition government.
Labour supports a referendum on changing the voting system but says it should not be tied to separate plans to "equalise" constituency sizes and reduce the number of MPs from 650 to 600. Many Tories support boundary changes but oppose changing the voting system.
The coalition says it is unfair that some MPs need almost twice as many votes to get elected as others because their constituencies have many more registered voters, but Labour says the proposals will disproportionately hurt Labour-supporting areas.
Labour MP Kevin Brennan asked whether plans for constituency changes were included in the same bill as the price of Conservative support for the referendum. Mr Clegg replied that, as they were "two issues that relate to how we are elected to this House", it had been "natural to bring them together".
Mr Clegg defended plans to reduce the number of MPs and to redraw constituency boundaries so they each represented about 76,000 people each, saying it was "patently obvious that individuals' votes should carry the same weight".
And he said the number of MPs had crept up so the UK now had the "largest directly elected chamber in the European Union".
But shadow deputy PM Jack Straw said while the number of MPs had increased by 4% in 60 years, the electorate had increased by 25% and MPs' workloads had "grown exponentially".
He said the proposals were nothing to do with the "high ideals" that Mr Clegg had claimed and were instead "the worst kind of political skulduggery for narrow party advantage".
But he said if the bill was split so the referendum was dealt with separately, Labour would support it.
More than 45 MPs - most of them Conservative - have signed a motion calling for the referendum to be moved to another day, arguing that holding it concurrently with elections to the Scottish Parliament, Welsh Assembly and Northern Ireland Assembly, as well as local council elections in some parts of England, could distort the result.
By holding it then, they say it could lead to different levels of turnout across the UK - favouring one side over the other - as well as "clouding" the arguments involved.
Angus MacNeil of the Scottish National Party also criticised the decision, telling Mr Clegg to "have some respect for elections that will be occurring in Scotland, in Wales and in Northern Ireland".
But Mr Clegg suggested that holding the referendum on the same date could save £30m and said it was "a little disrespectful" to assume voters could not manage to answer multiple questions on the same day.