Ministers saw off a move to give MPs the decisive say on what happens over Brexit if they do not agree with the deal negotiated by the United Kingdom government.
Further clashes were expected on Wednesday during debate on amendments relating to how closely Britain stays aligned with the EU's economy after leaving.
A dispute quickly arose about the third clause of Grieve's amendment, with Brexiters, including some ministers, quickly saying all that had been agreed was talks - and no government could agree to be "directed" by MPs.
Dismissing the Government's compromise, she tweeted: "Merely issuing a statement in response would make it a meaningless final vote".
He said: "Facing the prospect of a humiliating defeat, Theresa May has been forced to enter negotiations with her backbenchers and offer a so-called concession".
May's Cabinet is divided between ministers including Foreign Secretary Boris Johnson, who support a clean break with the European Union, and those such as Treasury chief Philip Hammond who want to keep close ties with the bloc, Britain's biggest trading partner.
Rebels have said they will challenge May's plans to leave the customs union with the EU during votes on other bills that will be brought back to the house some time before July 24.
May had feared a rebellion by her Conservative MPs over the motion, one of 15 submitted by the unelected upper House of Lords on which lawmakers will vote over the coming two days.
Ms. May's minority government relies on the support of Northern Ireland's Democratic Unionist Party for a slender working majority in the 650-member Commons.
Davis agreed to remain in place after receiving a guarantee the arrangement would last just a year and held a short meeting with EU Brexit chief Michel Barnier in Brussels today.
But Tuesday's victory came at a cost - a government promise to strengthen Parliament's voice, potentially at the expense of its own power to set the terms of any final divorce deal with the EU. Given that after November 30, the House of Commons looks set to be empowered in the negotiations, it would not be in Barnier's interest to negotiate a harder form of Brexit before the U.K.'s self-imposed deadline.
Phillip Lee's resignation came hours before British Prime Minister Theresa May faces crunch votes in parliament and a potential showdown with pro-EU rebels in her ruling party. If some of its leave-supporting lawmakers choose to vote against the amendment, the government could avoid defeat altogether.
The result followed a day of high drama as a justice minister in May's government resigned in order to back the amendment.
The new amendment will be written up at a later stage with detailed plans and concessions.
The government's eleventh hour amendment, lifted in large parts from Tory Remainer Dominic Grieve's own proposal and to be presented to the Lords on Monday, is expected to give MPs the right to veto the government's strategy if it fails to secure a political agreement with the European Union by 30 November.