The prime minister has announced he will be pushing ahead with boundary changes, despite opposition from Lib Dems in his own government.
Speaking to journalists during a visit to an outdoor education centre the prime minister refused to kill off the boundary review.
"Every party will have to make up its own mind how it votes," he said.
With Liberal Democrats and Labour set to oppose the bill, it is certain to be voted down in the Commons unless he comes to a new deal with Nick Clegg.
Meanwhile, questions were being asked about the ability of the coalition to survive until 2015, as MPs digested Clegg's revenge for the death of Lords reform.
The deputy prime minister told reporters he would instruct his MPs to vote against the constituency boundary review in retaliation for Tory MPs' refusal to support House of Lords reform.
However, senior Tory MPs have raised the question whether Lib Dems in the government will be forced to resign due to the ministerial code.
Discussing Lords reform and boundary changes, Foreign Office minister Jeremy Browne told Radio 4's Today programme "They're clearly part of the same constitutional package."
"One of them is about reforming one end of the houses of parliament and the other is about reforming the other end of the houses of parliament.
"They're about the legislature, the nature of the legislature."
The constitutional argument for linking the issues has left many parliamentarians unconvinced. Clegg is on record on several occasions robustly defending the idea of equalising constituencies. His instruction to his MPs to reject the idea now will be interpreted as rank hypocrisy by Tories.
Deputy leader Simon Hughes committed to encouraging Lib Dem MPs to reject the idea, however.
"You can't allow a coalition to go ahead if both sides don't deliver, and the message to the Tories is they must deliver and, because they haven't, we can't do the deal on boundary changes," he said this morning.
The tit-for-tat refusal is in neither party's long term electoral interests. The Lib Dems would be guaranteed a presence in parliament through a proportionally elected House of Lords and the Tory party would boost its MPs by at least 20 via the boundary review.
The news Clegg would resist the latter reform was greeted by dismay by Conservative activists yesterday. Tim Montgomerie, editor of Tory grassroots website ConservativeHome, called it "the single worst political event to hit the Tories since Black Wednesday".
George Osborne tried to pin the blame on Labour, who supported the principle of Lords reform by not the timetable for the bill.
"We have not been able to proceed on Lords reform, frankly, because there is opposition in parliament and the opportunism of the Labour party," he said.
The statement yesterday is likely to stoke the fires of rebellion among Tory MPs, who will consider their refusal to back House of Lords reform a resounding success.