LIBERAL Democrat activists last night (Monday, September 16) demanded an urgent review of the ‘bedroom tax’ – embarrassing Nick Clegg on the day he triumphed on economic policy.

The party rank-and-file passed a motion calling for new guidelines to protect “vulnerable groups including the disabled, elderly and children”.

Lib Dems also threw their weight behind local councils that are refusing to evict tenants that are falling into arrears.

At the Glasgow conference, speaker after speaker protested there were too few smaller homes for tenants being told to downsize, or lose housing benefit.

Among them was Suzanne Fletcher, from Stockton, who said people were “desperately worried” – with the help on offer from local councils far too little.

She said: “If people can show they are trying to find something smaller, that they are taking all the steps possible, they should be exempt from having to pay the bedroom tax.”

The Lib Dem leadership made little attempt to prevent the motion passing, but the vote was a deep embarrassment to Mr Clegg nonetheless.

The Lib Dem leader has repeatedly denied that the removal of the ‘spare room subsidy’ – the policy’s official name – is causing misery and sending tenant arrears through the roof.

The “bedroom tax” has penalised social housing tenants with spare rooms, cutting benefit by 14 per cent for an extra bedroom and 25 per cent where there are two.

The vote marred a day when Mr Clegg asserted his authority over his party on economic policy, defeating rebel left-wing amendments that demanded:

* The restoration of the 50p top rate of income tax – controversially cut to 45p last April. That amendment fell just four votes short, 224 votes to 220.

* Higher borrowing and public spending to boost recovery – despite the recent economic upturn.

* The ripping up of strict town hall borrowing limits, to allow them to build an extra 300,000 badly-needed homes every year.

Before the last two votes, Mr Clegg had urged his members to be brave and “stick to the plan” – warning the alternative would “destroy jobs and decrease prosperity”.

He said: “The only people who will welcome what we do today, if we adopt these amendments, are George Osborne and Ed Balls.”

Meanwhile, Business Secretary Vince Cable launched a fierce attack on the Conservatives, describing their politics as “nasty”, “ugly” and “deeply opportunistic”.

And he warned of the looming danger of another dangerous house price bubble, saying: “We have seen it all before and there are already amber lights flashing of history repeating itself."

* Lib Dem aides were left red-faced after accidentally emailing a briefing note - suggesting tax hikes for people earning more than £50,000 – to journalists.

They later insisted it had been “cut and pasted” from a year-old document and that there were no new income tax proposals. One said: “It was a copper bottomed cock-up.”