Jeremy Corbyn accused the Conservatives of continuing to be the "nasty party" as he urged Theresa May to scrap proposals to deny benefits to disabled people.
The Labour Party leader criticised George Freeman, head of Mrs May's policy unit, for suggesting people suffering anxiety were not "really disabled", claiming this was proof the Tory party has not changed.
Mrs May reiterated Tory MP Mr Freeman has apologised for his remarks and defended the Government's approach to people with mental health conditions.
The exchanges came in response to proposals for personal independence payment (PIP).
A tribunal said PIP claimants with psychological problems who cannot travel without help must be treated like those who are blind, and those who need support to take medication should be assessed the same way as those managing therapies like dialysis at home.
The Government has been accused of using the legal rulings to strip benefits entitlements from more than 160,000 disabled people.
Mr Corbyn said the Government had "sneaked" out the PIP plans and bemoaned the lack of consultation.
Mrs May said a statement was issued to Parliament about the changes, with Work and Pensions Secretary Damian Green making calls, including to his Labour counterpart Debbie Abrahams.
The PM said: "He called both offices of the shadow work and pensions secretary but there was no answer and they didn't come back to him for four days."
Mr Green and Ms Abrahams traded words as Prime Minister's Questions continued.
Mr Corbyn added he understood "no call" was made to Ms Abrahams' office.
He went on: "The reality is, this is a shameful decision that will affect people with dementia, those suffering cognitive disorders due to stroke, military veterans with post-traumatic stress disorder and those with schizophrenia.
"Can she look at the effects of her decision to override what an independent court has decided, and think again?"
Mrs May said the conditions are taken into account during PIP decisions, adding: "What the court said is the regulations were unclear - that is why we're clarifying the regulations and we're ensuring they reflect the original intention that was agreed by this Parliament."
Mr Corbyn later flagged up Mr Freeman's comments after noting Mrs May in 2002 described the Tories as the "nasty party" and stated some of her party had sought to make political capital by demonising minorities.
The opposition leader said: "This week her policy chair suggested people with debilitating conditions were those who, and I quote, take pills at home, who suffer from anxiety and were not really disabled.
"Isn't that proof the nasty party is still around?"
Mrs May said she hoped MPs would accept Mr Freeman's apology.
She later questioned how Labour would pay for an extension of PIP payments, telling the Commons: "I understand today (shadow health secretary Jon Ashworth), when asked how Labour would pay for the increase if it was put in place, said 'Er, we've not outlined that yet'."
Mrs May also highlighted the Conservative Party's by-election victory in Copeland, adding Labour MP Cat Smith had described the result as "incredible" for her own party.
The PM said: "You know, I think that word actually describes (Mr Corbyn's) leadership - incredible."
Mrs May formally welcomed Trudy Harrison, who won Copeland for the Tories, to the Commons immediately after Prime Minister's Questions.
Ms Harrison and the Conservatives snatched the Cumbrian seat from Labour which had held it since 1935.
Ms Harrison's victory was the first time a governing party had gained a seat in a parliamentary by-election since 1982.
The new MP was accompanied by Tory MPs John Stevenson (Carlisle) and Andrew Stephenson (Pendle) to the bar of the House before being formally sworn in.
Her arrival at the bar was greeted by loud cheering and the waving of order papers by the Tory benches while Labour MPs, including Mr Corbyn, sat in silence.
Ms Harrison and Mrs May exchanged a few words and a smile as the Copeland MP made her way past the PM to talk to Commons Speaker John Bercow having been sworn in.
A Downing Street source later said that Mr Green had personally left a voicemail message on Ms Abrahams's mobile phone as well as calling her parliamentary and constituency offices.
But a Labour spokesman said: "As I understand it the message was left during out-of-office hours and by the time it was picked up, we were already dealing with the substantive issue of 160,000 people who were expecting in two weeks' time to receive substantive rises in PIP payments and now won't as a result of the Government's decision."