A bill introduced into the provincial legislature by the NDP that would remove the harmonized sales tax from home heating bills has passed second reading.

The bill passed by a vote of 54-50.

The defeat for the Liberal minority government comes less than a week into its first legislative session since the October election but isn't necessarily a long-lived one.

Even with the Progressive Conservatives throwing their weight behind the HST legislation, the governing Liberals can still block it by refusing to call the bill for third and final reading in the legislature.

On Thursday Premier Dalton McGuinty said it's hard enough for the minority Liberals to find enough money in Ontario's cash-strapped coffers to fulfill their own campaign promises, without trying to find the cash to fund those of the opposition parties.

Yet the premier says he wants to find "common ground" with his rivals in what's turning out to be a combative legislative session.

The Liberals and opposition parties are battling it out with duelling legislation: the NDP — backed by the Tories — are fighting for the HST cut on home heating, while the Liberals are pushing a home renovation tax credit for seniors.

With the Liberals one seat short of a majority, neither side can get their legislation passed without some support — or abstentions — from the other side of the chamber.

McGuinty said he wants the support of the NDP on the tax credit, which formed part of the Liberals' election platform. But he wouldn't reciprocate by backing their HST bill, which will cost the province $350 million a year in lost revenue.

The proposed tax credit will create jobs, while the HST cut won't, he said.

The government found room in its red-ink budget to fund the tax credit, which will cost $136 million a year once fully implemented, McGuinty said.

"It's going to be challenging enough for us to fund our platform, let alone now to find ways to fund their platforms," he said after visiting a 91-year-old woman in Hornby, Ont., to promote the tax credit.

"So we're going to be focused now on different ways to move forward."

NDP Leader Andrea Horwath said she doesn't understand why the Liberals are giving corporations billions of dollars in tax breaks, but say they can't afford to give families a break on their heating bills.

"The government keeps telling us there's no revenue to help families, but billions and billions of dollars are available for corporate tax giveaways, billions of dollars are available for hikes to CEOs salaries and billions of dollars are available to move private power plants to help get votes for Liberals," she told the legislature.

The Liberals have also pledged to reduce tuition for some post-secondary students, which will cost $423 million a year once fully implemented.

Deputy premier Dwight Duncan said Thursday that blocking the final reading of the HST bill isn't subverting the will of parliament.

"We won the election, we have the most seats in the house, we're the government, we're the one who calls orders at third reading and we will call the orders that we think reflect the results of the election," he said outside the chamber.

It's disappointing to hear Duncan say that the Liberals will block the "popular" bill, said Progressive Conservative Leader Tim Hudak.