The Prime Minister was criticised by consumer groups, who said his energy policy was more convoluted than pricing schemes used by gas companies.
Observers dubbed the fallout the "combishambles", a reference to this year's Budget "omnishambles" which led to weeks of confusion followed by a series of humiliating Government U-turns.
Mr Cameron attempted to clarify the situation but stopped short of repeating his previous guarantee that he would compel energy firms, saying only his Government would use its forthcoming Energy Bill to "ensure that customers get the lowest tariffs".
Earlier Energy Secretary Ed Davey had suggested the legislation would not force companies to charge customers their best deal, only oblige them to offer their cheapest tariffs.
Downing Street also appeared to row back on the pledge by suggesting not every consumer would benefit from the move, saying it wanted to make sure "more people" received cheaper deals.
The Coalition seemed to blame customers for high bills, saying too many people did not take advantage of the option to shop around for better deals.
The confusion comes at the worst possible time for consumers, who this week were hit with another round of price hikes by energy companies.
Wednesday's announcement by the Conservative leader, during Prime Minister's Questions, appeared to surprise many, including electricity firms and even those in Whitehall.
As Labour accused the Government of plunging its energy policy into confusion, and likened the situation to the BBC satire The Thick of It, Energy Minister John Hayes refused to answer accusations that he first heard of the pledge when it was made. Asked whether he had known about the announcement in advance, he told MPs: "Does [Mr Cameron] give me notice of every answer? Does he get notice of every question? Of course the answer is no."
Labour said the Coalition had made up energy policy on the hoof and then desperately attempted to make it work. The party accused ministers of "pretending to have a policy they have no intention of implementing".
Charities and consumer groups were equally scathing. Greenpeace executive director John Sauven said: "The Government's energy policy is now as confusing as British Gas tariffs."
Which? executive director Richard Lloyd warned: "Just giving people information on the lowest tariff is not enough when trust is at an all-time low in the industry and switching levels are falling."
Meanwhile, the Federation of Small Businesses said the plan could actually lead to many customers seeing their bills increase by eroding competition in the market. Other business leaders warned the confusion could jeopardise billions of pounds of investment.
Neil Bentley, deputy director general of the CBI, said: "What this actually does is create a lot more uncertainty for companies who are looking to invest in the UK and invest in our energy infrastructure and new power stations. That's not good because we need companies to be looking to the UK to invest billions of pounds which are going to help create jobs in construction and engineering."
Arriving in Brussels for an EU summit last night, Mr Cameron said he was on the side of hard-pressed families "who struggle to pay energy bills".
"That's what I said in the House of Commons yesterday. We are going to use the Energy Bill, coming up this year, so we make sure that customers get the lowest tariffs," he added.
Earlier this year Liberal Democrat Deputy Prime Minister Nick Clegg outlined plans to oblige companies to inform customers of their cheapest rates. Asked what the difference was between that announcement and the Prime Minister's, No 10 said: "The difference is we are going to legislate so people get the lowest tariffs."
Earlier this year the Coalition announced a series of U-turns on controversial tax plans.