Gordon Brown has abandoned plans to impose a £17.5m in the Territorial Army's training budget after opposition from senior Labour MPs.
Former defence secretary John Reid is thought to have warned Brown that he faced a backbench rebellion similar in size to that over the Gurkhas unless he reversed the planned cuts.
On Monday, the government abandoned plans to suspend all routine TA training for six months, reducing the scale of the cuts from £20m to £17.5m. The cuts were designed to ensure resources were prioritised for the regular army.
Reid, who has often clashed with Brown in the past, praised the prime minister's decision to intervene.
"I very much welcome the fact that the prime minister has been prepared to listen to the issues and personally intervene to make sure that the Territorial Army training budget is retained," he said.
Reid and Eric Joyce, who resigned last month in protest at the government's military policy, were among many MPs to express concern about the possible impact on recruitment and retention of territorials.
The shadow defence secretary, Liam Fox, said the episode had been a "catastrophe" for Labour and exposed the party's "lack of understanding" for the armed forces.
He added: "Whilst it is another embarrassment for Gordon Brown, it is a victory for the forces of common sense, led by David Cameron and the
Conservatives, which have saved the TA from what was a sad and humiliating policy decision."
Liberal Democrat defence spokesman Nick Harvey said: "The state of the TA is much too important to be used as a political football in this way.
"It was a shocking error of judgment for the Government to have contemplated this cut in the first place."
