Opposition legislators fear a pro-Brexit Prime Minister could even suspend Parliament to force a no-deal exit.
He wants the United Kingdom to leave the European Union with or without a deal by October 31st, the current deadline.
Before the vote, Labour Brexit secretary Keir Starmer had warned: "MPs can not be bystanders while the next Tory prime minister tries to crash the United Kingdom out of the European Union without a deal and without the consent of the British people".
Mr. Starmer said defeated June 12 motion would have ensured that "If the next Prime Minister is foolish enough to try to pursue a no deal Brexit then Parliament would have the means to prevent that".
Vaz raised questions about the government's preparations for a no-deal Brexit, raising a cabinet note which outlined it is "still unprepared for leaving on October 31".
Asked whom he was supporting, Hammond said his priority was to push the contenders into accepting the need for economic prudence, and for avoiding a no-deal Brexit.
He said "delaying this does not stop no-deal being the ultimate default end point, what it does it put it further into the future". "Labour stands ready to use whatever mechanism it can to protect jobs, the economy and communities from the disastrous consequences of a no deal Brexit", Starmer said in a statement.More news: Hundreds arrested in Moscow protest against police impunity and corruption
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Labour introduced the motion today at 1pm, through an opposition day debate.
The motion was in part triggered by several Tory leadership candidates refusing to rule out proroguing Parliament to force an European Union departure.
"I do not think we will end up with any such thing, but it is only responsible to prepare vigorously and seriously for no deal".
Jo Swinson, deputy leader of the Liberal Democrats and hopeful to succeed Vince Cable as leader, blasted MPs for "putting party loyalty ahead of national interest" by rejecting the bill. Departing Prime Minister Theresa May tried and failed three times to convince Parliament to approve it.
But he insisted Parliament "won't allow" the United Kingdom to leave without a formal deal in place, adding Brussels would not allow the deal to be renegotiated.
Hammond, who sought assurances after becoming alarmed by the spending promises being made by Boris Johnson and Dominic Raab, disclosed that he had received private commitments from two campaigns.
He warned that failure to deliver on the referendum result would create an "existential threat" for both Labour and the Conservatives.