The Police Minister was accused of presiding over an "omnishambles" after apologising for errors made in the Government's controversial reform of the police funding formula.
Mike Penning said the Government "regrets" the statistical mistake and admitted the proposed changes were "never indicative" of police budgets under the formula.
The changes planned for 2016/17 have now been delayed but Mr Penning faced fierce criticism from Tory and Labour MPs, the influential Home Affairs Select Committee, Commons Speaker John Bercow and police and crime commissioners (PCCs).
Answering an urgent question in the Commons, Mr Penning said: "Within this process I am sad to say there was a statistical error made on the data that has been used.
"While this data does not change the principles of what was consulted on, the allocation provided to the forces was never indicative.
"We recognise this has caused a great deal of concern to police forces around the country. I and the Government regret this mistake and I apologise to the House.
"I also apologise to the 43 authorities that I wrote to during the extended consultation period as part of the funding formula review."
The apology comes amid controversy over the planned changes, with six PCCs threatening the Home Office with legal action over fears they were set to lose millions of pounds in Government support.
Home Affairs Select Committee chair Keith Vaz, who asked the urgent question, described the situation as a "shambles".
He stressed it was now unclear what funding forces such as the Metropolitan Police would receive and said 31 out of 43 English and Welsh forces could lose out.
The Labour MP said: "This entire process has been described by police and crime commissioners and others as unfair, unjust and fundamentally flawed.
"What started off with good intentions is rapidly descending into farce. To call it a shambles would be charitable."
Mr Vaz said an independent panel should be established to look again at the issue, adding: "More importantly (including people) able to count and understand mathematics - unlike some officials in the Home Office. This is a defining moment for policing."
Shadow police minister Jack Dromey condemned an "omnishambles process" while veteran Labour MP Dennis Skinner (Bolsover) called for Mr Penning's resignation.
Meanwhile, Commons Speaker John Bercow slammed the Home Office for declaring the issue was "not urgent", forcing Mr Vaz to ask an urgent question to get an explanation from Mr Penning.
Mr Bercow added: "It (the Home Office) was entitled to its point of view but I think the House would concur that it suffered from the quite material disadvantage of being wrong."
The error was first uncovered by Devon and Cornwall PCC Tony Hogg and not the Home Office, prompting Tory MP and former special constable Philip Hollobone to question the Government's ability to properly calculate funding for other services such as hospitals and schools.
The Kettering MP said: "I am concerned that the error was made by the department in the first place, and that the department didn't uncover the error itself."
Andrew White, chief executive to the Devon and Cornwall PCC, said the force was "delighted" that the changes were delayed and as the process had lost credibility.
Mr White added: "This is what we have been calling for for some time as the process gradually lost credibility and the admission of the significant errors last week were the final nail in the coffin."
Clive Grunshaw, Lancashire's PCC, said: "The whole process has been really badly handled and that is something I have been saying all along. This outcome totally vindicates my stance on the issue."
Former chancellor of the exchequer Lord Lawson of Blaby has questioned why the police are spending such "substantial" resources on following-up allegations of historic sex abuse.
"Many people in this country are rather puzzled by the fact that at a time when the police are evidently so stretched in their financial resources they are still able to find such substantial resources to devote to....following up historic sex abuse," Lord Lawson said during a debate on police funding.
Home Office Minister Lord Bates said that decisions on the way resources were used were made locally
Replying to Lord Lawson, the Minister said: "That obviously is an issue. On the question of the allocation of time and resources that is a matter for the local police and crime commissioners."
Lib Dem peer and former senior Metropolitan Police officer Lord Paddick said it was not the right time to change the funding formula as it was a case of "better the devil you know".