Theresa May faced shouts of "shame" as she defended the Government's record on helping children in poverty.
Labour's Rosena Allin-Khan (Tooting) said 2,500 children in Wandsworth, south London, will wake up homeless on Christmas Day.
She also questioned when the Government will say "enough is enough".
Mrs May was heckled by Labour MPs while seeking to clarify the definition of homeless and explaining this did not mean they would be "sleeping on our streets".
Speaking during Prime Minister's Questions, Dr Allin-Khan said: "In 2009, the Prime Minister said it was a tragedy that the number of children falling into the poverty cycle was continuing to rise.
"Every child deserves to have a roof over their head and food on the table.
"Yet on her watch, in Wandsworth alone the number of families forced to survive on food banks is continuing to rise and 2,500 children, yes children, will wake up homeless on Christmas Day.
"So my question is simple - when will this austerity-driven Government say enough is enough and put an end to this tragedy?"
Mrs May replied: "You should note that in fact this Government has lifted hundreds of thousands of children out of absolute poverty.
"But I think it's important for all those who have heard her question to be aware of this - she talks of 2,500 children in Wandsworth waking up homeless on Christmas Day.
"Anybody hearing that will assume what that means is that 2,500 children will be sleeping on our streets - it does not mean that."
Shouts of "shame" could be heard from the Opposition benches before Speaker John Bercow intervened, telling MPs that questions and answers would be heard.
Mrs May went on: "It's important we are clear about this for all those who hear those questions because, as we all know, families with children who are accepted as homeless will be provided with accommodation.
"I would also point out to honourable members opposite that statutory homelessness is lower now than it was for most of the period of the last Labour government."