Political Correspondent Guto Harri: The government faced the prospect of an embarrassing defiance

The changes appear to have reduced the chances of a large-scale rebellion by Labour MPs when the Asylum and Immigration Bill returns to the Commons next week.

Backbench opposition centred on plans to discourage bogus asylum seekers by replacing benefits for basic needs with a voucher system and a small amount of cash.

The government has now offered to increase the proportion of benefit paid in cash.

Mr Straw received a generally favourable reaction when he outlined the changes to about 40 potential rebels on Tuesday and then to members of the Parliamentary Labour Party on Wednesday.

Jack Straw appears to have minimised chances of a backbench revolt

Clive Soley, chairman of the PLP, acknowledged that some people still had reservations, but said the sting had been drawn from any potential rebellion.

"I think the heat has gone out of this argument," he said.

But MP Neil Gerrard - who had predicted a rebellion on the scale of the recent revolt against disability benefit reform - warned it was impossible to achieve the aim of deterring fraudulent asylum applications without penalising the innocent.

Mr Gerrard, chairman of the all-party group on refugees, said: "Jack Straw's concessions don't alter the principle of the bill, but they do represent a significant move."

Blair: 'No climbdown'

Tony Blair: We can't allow the asylum system to be abused

The government has been keen to win over dissenters to prevent a repeat of anything like the scenes last month when it suffered its largest backbench rebellion since coming to power in 1997.

On that occasion more than 60 MPs defied its plans to cut incapacity benefit for the disabled.

But Prime Minister Tony Blair denied the government had caved in to avoid another embarrassing display of defiance.

Tony Blair says the government was right to listen

"I don't know where you are getting any idea of a climbdown," he said on Wednesday morning.

He defended the reforms, but said it had been right to take account of his MPs' reservations.

"Of course we have got to try to satisfy these concerns, because they're perfectly legitimate," he said.

"But what we are not prepared to do is give way at all on fundamental reforms of the asylum system, because the system at the moment is subject to massive abuse."

Increased cash payments

Labour MPs had complained that under the original provisions of the bill adult asylum seekers would have received just £7 a week in cash and child asylum seekers £3.50 - plus vouchers.

Political Correspondent Guto Harri explains the concessions

Mr Straw has now offered to increase the cash proportion to £10 for both adults and children.

The overall level of support, including vouchers, would be retained at the same level as planned.

Mr Straw also announced that fast-tracking of family cases would be brought forward by 12 months from April 2001.

Under the fast-track system, cases would be dealt with on an initial basis within two months with a further four month limit for appeals.

The home secretary has also sought to calm other fears by amending the bill to ensure that child asylum seekers are protected by the Children Act and by enshrining a "presumption for bail" for detained asylum seekers.