Martin had put the cabinet on the line over the his spending plans
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Canada's minority government has narrowly avoided a no-confidence vote that had threatened to unseat beleaguered Prime Minister Paul Martin.
Parliament had been due to vote on Thursday on an opposition amendment to his spending plans.
Mr Martin had said he regarded it as a confidence vote. But this was averted at the last minute, after all sides approved a revised amendment.
The crisis came amid a row over navy submarines purchased from the UK.
One of the submarines caught fire off the coast of Ireland, killing one crew member.
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It is a matter of such importance that if the government
fell over it we'd go to an election
Prime Minister Paul Martin
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The parliamentary showdown centred on a move by the regional Bloc Quebecois - supported by the opposition Conservatives - to commit the government to spending budget surpluses on provincial governments.
Mr Martin had been angered by the move.
"It is a matter of such importance that, if the government fell over it, we'd go to an election," he said.
But 30 minutes before the vote was due to take place, the opposition and the government announced a compromise wording that addressed Mr Martin's constitutional concerns.
Sub inquiry urged
Meanwhile, members of parliament have called for urgent inquiries into the purchase of the British submarines.
The UK mothballed HMCS Chicoutimi in 1994, but then refitted it, with three others, to be sold to Canada. All have had major problems.
On Wednesday, parliament held a minute's silence for Lt Chris Saunders, who died after a fire aboard the submarine.
The defence spokesman for the opposition New Democratic Party, Bill Blaikie, said the possibility of making a claim against the British should be explored.
"I have heard reports suggesting the hull had to be reinforced, there were leaky valves, dented holes, a lot of malfunction," he said.
"We have gone from a litany of problems to tragedy," he added.
The Canadian Conservative Party has also questioned the decision to buy the vessels.