Holyrood last night backed demands for the reinstatement of an annual £30m attendance allowance denied by Westminster after Scotland pursued its own policy on free personal and nursing care for the elderly.

As revealed in The Herald yesterday, Labour MSPs ended up voting against this, in spite of the fact shadow ministers promised a fortnight ago to back Lord Sutherland in all of his recommendations.

SNP MSPs were delighted last night, feeling Labour had run scared of another confrontation with Westminster while Tories had erred in giving any backing to this stance.

Conservatives initially backed the Labour position but when that fell they supported the Liberal Democrat amendment which backed the Scottish Government position, passed by 79 votes to 43.

Labour's shadow health secretary Margaret Curran said: "We do accept and have consistently argued that the resources should come to Scotland but I will not allow you to use that as just an attempt to get into a narrow dispute with London."

Instead, a "fruitful and constructive" approach should be taken, she said, adding: "It is much more likely to resolve financial issues that way than if you adopt the approach by Nicola Sturgeon."

Westminster withdrew attendance allowance to self-funding people in care homes when free personal care was introduced in 2002, but a review into the policy published earlier this month by its original architect Lord Sutherland criticised the move and called for it to be reinstated.

It also identified a £40m funding shortfall in the policy which has since been met by the Scottish Government. Ms Sturgeon said withdrawal of attendance allowance contributed to the shortfall.

The Health Secretary said: "Engagement will be easier if the running sore of past injustices over attendance allowance is resolved. Lord Sutherland said quite clearly the return of the £30m allowance should be sought ahead of funding reviews."