LORD Freud is clinging onto his job as a Welfare Minister after making an abject apology for remarks in which he suggested some disabled people were "not worth" the minimum wage.

Labour and the SNP demanded the Conservative peer resign but No 10 made clear David Cameron - famous for giving second chances - had full confidence in the Minister given his public apology.

But,politically, Lord Freud's comments enabled Ed Miliband to claim the Tories were resorting to their basic instincts, telling MPs: "The nasty party is back."

Lord Freud, the Minister for Welfare Reform and responsible for bringing in the bedroom tax, was recorded in a fringe meeting at last month's Conservative Party conference responding to David Scott, a Tory councillor, who expressed concern that some "mentally damaged individuals" who wanted to work were unable to do so because employers were unwilling to pay them the £6.50-an-hour minimum wage.

The Minister replied: "You make a really good point about the disabled...There is a group - and I know exactly who you mean - where actually, as you say, they're not worth the full wage and actually I'm going to go and think about that particular issue, whether there is something we can do nationally, and without distorting the whole thing, which actually if someone wants to work for £2 an hour, and it's working can we actually..."

Esther McVey, the Employment Minister, warned that his words would "haunt" him.

Tory backbencher Mark Garnier insisted Lord Freud should be sacked.

At PMQs, Mr Miliband revealed the peer's words and said:"Surely someone holding those views can't possibly stay in your Government? In the dog days of this Government, the Conservative Party is going back to its worst instincts - unfunded tax cuts, hitting the poorest hardest, now undermining the minimum wage."

To cries of "shame" from Labour MPs, the PM insisted it was "absolutely not" his view that people with disabilities were not worth the full minimum wage rate.

He instructed his office to contact Lord Freud.

Within an hour, the Minister issued a statement that he had been "foolish" in "accepting the premise" of the question. "I would like to offer a full and unreserved apology. To be clear, all disabled people should be paid at least the minimum wage, without exception, and I accept that it is offensive to suggest anything else."

At Holyrood, SNP MSP Kevin Stewart lodged a parliamentary motion, condemning the original remarks as "absolutely disgusting" and demanded he resign or be sacked.

D