One hundred and thirty MPs have backed the eurosceptic amendment, in what initially appears to be an even greater setback for the prime minister than expected.
The division, which brought to a head weeks of mounting tension over the Conservatives' Europe policy, saw the government defeat John Baron's amendment regretting the absence of an EU referendum bill from the coalition's legislative agenda by 277 votes to 130.
Only around 15 Labour MPs backed the amendment, leaving over 110 Tory MPs supporting the eurosceptic ringleaders over their party leader.
MPs in the Commons chamber showed clear surprise as it emerged quite how many of their number had backed the amendment.
Tory backbencher Peter Bone, who tabled the amendment alongside Baron, said afterwards the Conservative party had united against the coalition, rather than Cameron.
"What it's saying is we want the government to bring this bill in," he said. "It's quite clear the prime minister wants to bring this in... but has been blocked by the Liberal Democrats. They can vote against it, but let's have a vote in parliament."
Foreign secretary William Hague had appealed to Conservative MPs in an evening meeting of the 1922 Committee to vote against the amendment.
Downing Street had been forced to allow ministers to abstain from the government, while backbenchers were given a free hand to rebel.
Before the vote David Cameron again insisted he was "relaxed" about the division in an attempt to downplay its significance.
"It is a free vote, and as I've said I'm very relaxed about that," he said in a brief press conference at the United Nations in New York. "I don't think people can read in anything to the scale of that free vote."
The number of Tory MPs voting against the government greatly exceeds the 81 rebels who humiliated Cameron in October 2011, and the 91 Tory rebels who opposed Lords reform in July last year.
Earlier, Ed Balls summed up the nightmare endured by the Conservative party in his speech earlier.
He said: "We have seen Tory backbenchers last week defying the prime minister to vote against the Queen's Speech; former Tory chancellors openly calling for Britain to leave the European Union; serving Cabinet ministers joining the chorus at the weekend, saying they would vote for Britain to leave the EU now; and the embarrassing spectacle and truly ludicrous sight of a British prime minister in Washington negotiating an EU-US trade deal, while back home members of his own Cabinet say they would vote to exclude Britain from its benefits."
Baron objected to his description of the amendment and explained he supported Cameron in his "idea" of holding a referendum in 2017.
"If he can successfully renegotiate and re-engineer an EU based on trade and not on politics, that will be a different kettle of fish, and we will judge it at the time," he said.
Pressing Labour to spell out why it opposes a referendum bill now - a decision which means Baron's amendment does not pose any risk of a Commons defeat for the prime minister - Balls said such a move would damage the UK economy.
"I think that the priority now, in the Queen's Speech, should be for the government to act on economic growth, short-term and long-term," Balls added.
"Hanging a sign above our door saying 'for the next four years, Britain is closed for business' would be a very, very foolish thing to do."
It appears yesterday's publication of a draft EU referendum bill rubber-stamped by Downing Street did not substantively diminish the impact of this evening's revolt. The Conservative party is hoping a Tory MP will adopt the bill after tomorrow morning's ballot for private member's bills.
"We'll have to see what happens. The prime minister has said he's relaxed about how backbenchers vote," Europe minister David Lidington told politics.co.uk in an interview yesterday.
"A referendum on Europe during the midpoint of the next parliament is Conservative party policy, though not coalition policy. So I think we would very much expect the overwhelming majority of Conservative MPs would be willing to support the private member's bill along the lines of the one published [yesterday]."
None of the Tory MPs spoken to by politics.co.uk in parliament yesterday expressed satisfaction with the current arrangement.
One said he was backing the amendment because he felt his voters expected him to be deeply eurosceptic - but that he disagreed with its "regret" wording as "ridiculous".
Another criticised Cameron for having adopted the private member's bill alternative, warning this would "dilute" the basic message that the Conservatives are the only party offering a referendum in the next parliament.
A third MP said he wanted to see a referendum - but had not yet decided whether to support the amendment or not.
Speaker John Bercow selected the Baron/Bone amendment this morning. Under Commons rules amendments to the Queen's Speech debate are permissible from the main opposition party, a second opposition party and a third, non-aligned source.
A recent Commons briefing paper explains: "Any member may table an amendment to the address, or add his or her name to an amendment tabled by any other member." It then adds: "No amendment to the address has been carried since 1924."
Clegg admits it: EU referendum is inevitable
Earlier Nick Clegg shifted his party's position slightly by conceding that he believes a referendum on whether Britain should stay in the EU is now inevitable.
The europhile deputy prime minister made the comment as he stood in for Cameron, who is on a visit to Washington, for PMQs.
Asked about his 2010 manifesto commitment to hold a referendum on the EU in the event of a change in the relationship between Britain and Brussels, he said: "I think it is a question of when, not if, because the rules are bound to change."
The quote is less a comment on Cameron's pledge of a 2017 referendum than a view on how the British referendum lock will force a poll if there are further changes at an EU level, for instance by a consolidation of political union among eurozone countries.
But it reflects a sea-change of opinion in Westminster and cements the impression that even defenders of the EU believe a fundamental change in Britain's relationship with the continent is underway.
Later in the session, Clegg accused Tories of trying to "change the goalposts" by demanding a referendum on Europe soon.
Tory MP Edward Leigh brandished a 2010 Liberal Democrat election leaflet featuring Clegg promising a referendum to the Commons and asked if the photo of the deputy prime minister was of "an imposter or a hypocrite".