DAVID Cameron said his Government will go "further and faster" in efforts to repair the nation's finances in response to the loss of the UK's prized AAA credit rating.
The Prime Minister said the decision by rating agency Moody's was a warning to politicians who believed the country could "walk away" from addressing the nation's debt problems.
But at Prime Minister's Questions, Labour leader Ed Miliband said the loss of AAA status meant Mr Cameron had failed the economic test he had set himself.
"It's not just our credit rating that's been downgraded, we have a downgraded Government, a downgraded Chancellor and a downgraded Prime Minister," Mr Miliband said.
But the Prime Minister compared the Labour leader to former premier Gordon Brown, saying all he could offer was increased borrowing and debt.
Ahead of the Eastleigh by-election tomorrow Mr Cameron also challenged Mr Miliband to condemn comments by Labour candidate John O'Farrell about the Brighton bombing.
The Prime Minister said: "The decision of the ratings agency is a reminder of the debt and the deficit problem that this country faces and, frankly, it is a warning to anyone who thinks we can walk away from it.
"It is absolutely vital that we continue with the work of this Government that has cut the deficit by a quarter, that has a million extra private sector jobs and has interest rates at record low levels."
He said it was Mr Miliband's policy "to address excessive borrowing by borrowing more".
The Labour leader said the Tory manifesto in 2010 said safeguarding Britain's credit rating was the first of Mr Cameron's "benchmarks for Britain against which the British people can judge the economic success or failure of the next government".
He asked Mr Cameron: "Do you accept that by the first test you set yourself you have failed?"
The Prime Minister said Moody's, which lowered the UK's rating by one notch to AA1, had warned of further downgrades if there was "reduced political commitment to fiscal consolidation".
Mr Cameron said the Government accepted that was the "vital work we have to do" but Labour wanted to increase borrowing.
Mr Miliband said Chancellor George Osborne had said the loss of AAA would be a "humiliation" and challenged Mr Cameron to accept he had failed his self-imposed test.
Mr Cameron told the Labour leader: "I'm not arguing that the rating agency doesn't matter, that's your argument.
"Your argument is the rating agency doesn't matter, the answer to debt is to borrow more and not to take any responsibility for the mess you left."