The government has won a vote over plans to privatise the Probation Service, despite a backbench revolt.
Home Secretary John Reid will try to sway rebel backbenchers
MPs voted 293 to 268 in favour of the Offender Management Bill - cutting the government's majority from 62 to 25.
Critics said letting firms and voluntary groups in England and Wales run services would increase reoffending rates and destroy "local connections".
The government said reforms were key to improving public safety and insisted the public sector would be involved.
Home Secretary John Reid told MPs that the process of reform would not be rushed.
"The core offender management tasks of the Probation Service, for example offender report writing, offender supervision and breach proceedings, will remain in the public sector for the next three years."
He also said local accountability would be important in running probation services, with probation boards having to co-operate with councils.
"I firmly believe that this Bill, together with related reforms will increase not reduce that accountability."
He said the re-offending rate was still high despite investment, therefore more than one sector was needed to handle the situation.
"We need to open up the reservoir of potential assistance for offenders so that every provider - public, voluntary, charitable and the private sector - can play to their strengths," he said.
He also said that if the public sector were "good enough then it will have every bit as much chance, and some would say because of the history of involvement in this and their experience, a better chance, as anybody else to win this work."
He had warned Labour MPs: "To vote against the government tonight in contradiction to everything they have publicly declared in the past, even if they were to win, would be at best a hollow victory, since in capturing their minutes of opportunism they will have thrown away the hours of integrity and it will have been noticed by the public.
"It is the sustaining of policy and principles over the hours which is the true mark of leadership and potential governance."
Shadow Home Secretary David Davis said the Conservatives were voting against the bill because it was a move to more centralised government control - which was "bad in its own right".
But he also said that with the Home Office already "struggling to cope... that sort of over-centralisation is a recipe for disaster, something the home secretary might recognise."
He added that the bill would introduce the third Probation Service restructuring in six years - "it is impossible to improve service delivery in this way."
The bill would also be a "distraction" from other problems such as prison over-crowding and reoffending rates, Mr Davis said.
"This government can still not learn one self-evident truth: It can't legislate its law and order failings away."
The government earlier won a vote on an amendment tabled by Labour MP Neil Gerrard which would have excluded firms and voluntary groups from carrying out "core" probation tasks.
MPs voted by 267 to 111 for the amendment - a majority of 156.
During Wednesday's debate, Mr Gerrard said companies with no experience of handling offenders would end up "poaching" staff from the Probation Service.
"What we end up with is a mass of different providers and we lose a national service and you start to get fragmentation then.
"It is very much more difficult then to control what is going on and we lose all the local connections that are there at the moment."