The Work and Pensions Secretary was accused of betraying 3.5 million claimants when she declared that handing out the cash would cost taxpayers £3.5billion to £10.5bn.
Yesterday's move follows Labour's decision to means test winter fuel payments that will deny around 10 million pensioners £300 a year.
Retired teacher Julie Hince, 65, who was left out of pocket after the retirement age rose from 60 to 66, branded the decision an "absolutely shameful day for this government".
There were shouts of "shame" as Ms Kendall rejected an ombudsman's recommendation that women born in the 1950s who missed out on pension payments should be given between £1,000 and £2,950 each.
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