George Osborne has defended David Cameron's decision to recall Parliament after the Prime Minister's shock defeat over Syria.
The Chancellor hailed the move despite it leading to the rejection of the principle of military action and a serious blow to Mr Cameron's authority.
The Prime Minister had urged MPs to support intervention, calling last week's atrocity in Damascus "abhorrent" and the cause of "sickening human suffering".
But he was left humiliated after 39 Tory rebels and nine Liberal Democrats joined with Labour to oppose the Government and won by 285 votes to 272.
Mr Osborne admitted the surprise result would prompt "national soul-searching" about Britain's role on the world stage.
But he insisted talk of significant damage to Britain's special relationship to the US was "hyperbole", saying the White House had shown a "lot of understanding".
"David Cameron is, I think, pretty much the first prime minister who would ever have gone to the House of Commons to get consent for this kind of limited military action," he said.
"There are plenty of prime ministers before him who didn't. He didn't have to, constitutionally, but he wanted to.
"That partly reflects the world we live in, post-Iraq, it's a political reality, but it also reflects David Cameron's very strong belief in the importance of Parliament and the importance of trying to achieve some kind of consensus rather than trying to divide opinion."
Mr Osborne added that he understood the "deep scepticism" about intervention but said: "I hope this doesn't become a moment where we turn our back on all of the world's problems."
One of the Tory rebels, former minister Crispin Blunt, described the effect on Mr Cameron's reputation as a "temporary blip".
"He has done a huge amount to repair the reputation of the institution of Parliament, having learned the lessons from Tony Blair and the experience of 2003 and Iraq," he said.
"He exposed himself to the potential for defeat last night because of the way he manages Parliament. That is to his eternal credit."
Former British Army chief General Lord Dannatt called the vote a "victory for common sense" and said the "drumbeat for war" had dwindled among the British public in recent days.
But a despondent Lord Ashdown told Sky News: "I fear as I wake up this morning that our country is a hugely, hugely diminished country.
"In more than 50 years of trying to serve my country in one form or another, I don't think I have ever felt more depressed or ashamed."
Meanwhile, the Foreign Office warned Britons against all but essential travel to Lebanon due to the "heightened risk of anti-Western sentiment" linked to possible action against Syria.
A Labour amendment calling for military action only after UN inspectors reported and the Security Council had voted was rejected shortly before Mr Cameron lost the main vote.
Education Secretary Michael Gove was heard shouting "disgrace, you're a disgrace" at coalition rebels after the result was announced.
The Scottish National Party's Westminster leader Angus Robertson told Sky News he watched as the minister had to be "persuaded to calm down".
Mr Cameron immediately said: "I strongly believe in the need for a tough response to the use of chemical weapons but I also believe in respecting the will of this House of Commons.
"It is clear to me the British Parliament does not want to see British military action. I get that and the Government will act accordingly."
The Prime Minister had already been forced to water down his position by Labour and promise direct British involvement would require a second vote.
Opening the emergency debate, he made a passionate plea for MPs' support as he warned of the consequences if the world failed to step in.
He admitted it was not possible to be 100% certain the Assad regime was behind the attack in Damascus but said he had been convinced by the evidence available.
Labour leader Ed Miliband accused Mr Cameron of "reckless and impulsive leadership" and called for a calm and measured response.
"People are deeply concerned about the chemical weapons attacks in Syria, but they want us to learn the lessons of Iraq," he said.
"They don't want a rush to war. They want things done in the right way, working with the international community."
The vote is also a blow to Washington and other countries seeking a wide coalition of support for air strikes to punish the Assad regime.
But Caitlin Hayden, Barack Obama's national security council spokeswoman, said Britain remained "one of our closest allies and friends" and that the US would continue to communicate with No10.
The president's decisions would be based on "the best interests of the United States", she added - raising speculation that the US may launch unilateral military action within days.
"He believes that there are core interests at stake for the US and that countries who violate international norms regarding chemical weapons need to be held accountable," she said.
French president Francois Hollande also made clear he could launch action without Britain as he insisted all options are still on the table.
Stressing the need for "proportional and firm action", he said: "The chemical massacre of Damascus cannot and must not remain unpunished."