Sir Keir Starmer risked further infuriating his party as he appeared to defend his stance on maintaining the two-child benefit cap.
There has been disquiet among Labour MPs after the party leader confirmed he would retain the Conservative-imposed limit.
The policy, introduced by Tory former chancellor George Osborne during his austerity drive, prevents parents claiming Universal Credit for any third or subsequent child.
Experts say scrapping the cap would lift around 270,000 households with children out of poverty at an estimated cost of £1.4 billion in the first year.
But Sir Keir said the economic situation a future Labour government would be faced with if it wins power would mean it would have to be stringent on spending pledges.
Sir Keir, asked during a conversation with Sir Tony Blair at the Future of Britain conference what he would say to those wanting more spending commitments, said: “My first reaction is we keep saying collectively as a party that we have to make tough decisions.
“And in the abstract, everyone says, ‘That’s right Keir’.
“But then we get into the tough decision, we’ve been in one of those for the last few days, and they say, ‘We don’t like that, can we just not make that one, I’m sure there is another tough decision somewhere else we can make’. But we have to take the tough decisions.”
Former prime minister Sir Tony praised Sir Keir for the “amazing” work he had done to bring Labour “from the brink of extinction” in 2019 to the “brink of government”.
He said the economic picture Labour could potentially inherit after a likely general election next year, with Sir Keir’s outfit currently riding high in opinion polls, was far more stark than in 1997 when New Labour won a landslide.