A confidence vote was expected later today or early tomorrow but was not expected to get the required backing of an absolute majority of deputies needed to oust Rajoy.
Rajoy did battle chiefly with Pablo Iglesias, leader of the far-left Podemos party, who presented the motion and his candidacy as an alternative leader.
But Podemos only has 67 deputies in the 350-seat parliament and not many supporters.
His party, with 134 seats, should have the support of the centrist Ciudadanos party's 32 deputies and several smaller groups.
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Iglesias pummeled Rajoy with accusations and said he would "be remembered as the president of corruption."
Podemos' No. 2, Irene Montero, listed the dozens of corruption cases engulfing Rajoy's party and demanded that it "give the stolen money back, every cent of it, and ask for forgiveness."
He argued there were cases of corruption in all parties but said it was not the norm and no case involved any member of his government.
He accused of Podemos of being a radical group bent on upsetting Spain's stability.
Boasting that Spain in 2017 was growing at double the rate of its neighbors and creating a half-million jobs yearly, Rajoy said Iglesias' radicalness made him unfit to be premier and "would lead us back into crisis.
Today's debate came as Spain's central bank revised upward its 2017 growth forecast from 2.8 per cent to 3.1 per cent.
Rajoy has made economic growth and job creation his chief goals since first taking office in 2011.
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