The Prime Minister triggered the row after he told MPs disposable incomes had risen in the past year and were still rising.
Labour immediately accused Mr Cameron of talking "total nonsense".
The party pointed to figures that show the amount households have left over after essentials fell in the last quarter compared to the same time last year.
But the Conservatives produced rival statistics that showed that during 2011-12, the last full year for which figures are available, it rose.
However, the party could not provide evidence for Mr Cameron's claim that the amount of money in people's pockets was still growing.
The row erupted after a heated exchange at Prime Minister's Questions after Mr Cameron rejected Labour leader Ed Miliband's warning that the UK was suffering a cost of living crisis.
Mr Cameron said: "What you have to do is look at disposable income, as well as wages.
"Because this government has cut people's taxes, because we are allowing people to keep £10,000 of what they earn before they pay taxes, disposable income went up last year and it is rising as we speak today."
According to the official figures cited by Labour in the second quarter of 2013 real household disposable income was 0.7% lower than a year before.
But the Conservatives pointed to statistics that show disposable income rose 1.6% during the 12 months of 2011/12.
Today Labour will attempt to focus again on living costs as the party unveils plans to tax payday lenders and use the money to double the government help available to credit unions.
Mr Miliband is expected to say: "We must protect the most vulnerable people in our society from the worst of exploitation by payday lenders. And it is right that the companies that benefit from people's financial plight, accept their responsibilities to help ensure affordable credit is available."