Prime Minister Tony Abbott is vowing not to give up on the government's budget savings despite caving in to pressure from Labor to dump controversial pension and welfare changes.
Put on ice are work-for-the-dole measures that would have denied assistance to job seekers for six months, and changes to the age pension and family payments.
But Labor will support tightening the means test for Family Tax Benefit Part B, among smaller cuts such as ending indexation for the clean energy supplement.
Shadow treasurer Chris Bowen challenged Mr Abbott in parliament on Thursday not to revisit the dropped measures when the government released the mid-year budget review in December.
Mr Abbott denied any budget measures had been dumped, saying they had merely been "recast".
"The budget savings that we haven't got today we will keep trying to get tomorrow and the day after tomorrow and the day after that," he said.
But Opposition Leader Bill Shorten said the compromise had destroyed the credibility of the budget and the prime minister.
"This is the government defeated," he told parliament.
Social Services Minister Kevin Andrews hailed it as a victory for the government, saying Labor had supported $2.7 billion worth of welfare cuts.
"That's actually success," he said.
However, Treasurer Joe Hockey is now seeking more budget savings to fill the gap caused by the backdown, as well as an extra $630 million for national security agencies and an expected annual bill of around $500 million for military action in Iraq.
While there are suggesting foreign aid spending could be further cut, Foreign Minister Julie Bishop said cabinet hadn't discussed it.
Opposition finance spokesman Tony Burke warned further cuts to foreign aid would be "unwise".
"Foreign aid can be one of the extraordinarily powerful weapons against extremism," he said.
Labor argues if the dumped savings measures were included in the mid-year economic and fiscal outlook, the document would be based on a "fabrication".
Mr Abbott said the government's strategy was on track, citing the passing of the budget appropriation bills, $7.6 billion in foreign aid savings, the budget repair levy on high-income earners and the mining tax-related spending measures.
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