Rhetoric about benefit “scroungers” and “skivers” used by the Conservatives will be toned down after a backlash from their own ministers and MPs, who fear the attacks could revive the Tories’ image as “the nasty party”.

Iain Duncan Smith, the Work and Pensions Secretary, has joined the criticism of the language used by Conservative Campaign HQ and the Chancellor George Osborne. Mr Duncan Smith was appalled by a Tory online advert last month showing a man on a sofa, asking whether the Government should support "hard-working families or people who won't work".

Lynton Crosby, the Australian political strategist who starts work this month as the Tories' election campaign chief, joined Mr Duncan Smith in warning the party not to repeat the ad. Today the Tories ran a different ad, attacking Labour and saying they were "standing up for hard-working people".

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MPs have voted to give a second reading to the Welfare Benefits Uprating Bill by 324 votes to 268, a government majority of 56. The measure will limit the rise in most state benefits and tax credits to one per cent for the next three years. The Commons rejected a Labour amendment opposing the measure by 328 votes to 262.

One Tory minister told The Independent: "We've not got the language right at Conservative HQ and the Treasury. Some people who lose their jobs and many people on tax credits, are strivers not scroungers. Young people looking hard for their first job are not skivers; there is a danger we may make them feel like parasites, and that we look like the nasty party. The message should be that we are making work pay."

Martin Vickers, Tory MP for Cleethorpes, where 500 jobs will be lost when the Kimberly-Clark nappy firm closes a plant, said: "I support the Bill but we must not tar everyone with the same brush. Some people in my constituency who will be on benefits for a few months; in no sense will they be scroungers." Sarah Wollaston, Tory MP for Totnes, said: "We have to be very careful about the language that we use … I don't feel it's right to use words like skivers. It might rhyme with strivers but it doesn't mean that it's the right word to use for people on benefits."

Some Liberal Democrat backbenchers voted against the Bill, even though it was backed by Nick Clegg. John Leech, MP for Manchester Withington, said: "I find it objectionable that the Tories are using 'skivers versus strivers' rhetoric to justify a cut to seven million working families."

Sarah Teather, a former education minister, told the Commons that using "the language of shirkers and strivers will have long-term impacts on public attitudes". They were joined by David Ward of Bradford East and Julian Huppert of Cambridge.

Vince Cable, the Lib Dem Business Secretary, said: "I'm very uncomfortable with some of the language being used by our coalition partners, attacking people out of work... That … is completely unacceptable."

Labour adopted the high-risk strategy of opposing the measure but claims public opinion is shifting its way because two-thirds of those affected by the below-inflation rises are low-paid people in work.

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Liam Byrne, the shadow Work and Pensions Secretary, said: "They know this is a strivers' tax pure and simple and they're now desperate to hide it."

*l David Cameron and Nick Clegg are set to publish a dossier detailing progress on 480 pledges made by the coalition Government, which will acknowledge that some more than 70 targets have been missed, according to reports. The Daily Telegraph reported that the document will confirm that the coalition has failed to meet pledges in areas ranging from pensions and road-building to criminal justice, and said its publication appeared to have been delayed amid fears that it would overshadow any favourable coverage of the coalition's mid-term review.

Cameron loses second minister in two days

David Cameron's attempt to start the new year on a positive footing suffered another setback tonight when a second minister resigned from his Government.

Lord Marland of Odstock, a junior trade minister at the Department of Business, Innovation and Skills, is the second Conservative minister to leave the Government in as many days. It follows the surprise resignation on Monday of Lord Strathclyde as Leader of the House of Lords, which marred a relaunch of the Coalition.

A Downing Street spokesman said: "Lord Marland will be stepping down as a minister in order to focus on his role in trade promotion." The former Conservative Party treasurer will continue to act as the Prime Minister's trade envoy, and will lead delegations of businessmen on foreign trips.

Andrew Grice