“Waspi women” affected by the rising state pension age will not get compensation, the government has announced, with the prime minister arguing it would be wrong to burden the taxpayer.

Keir Starmer was asked about the issue in Estonia, after the work and pensions secretary, Liz Kendall, told MPs she was rejecting the parliamentary and health service ombudsman’s recommendation for compensation to be paid.

The chair of the Women Against State Pension Inequality (Waspi) campaign, Angela Madden, responded with fury to the government’s decision.

“This is a bizarre and totally unjustified move which will leave everyone asking what the point of an ombudsman is if ministers can simply ignore their decisions. It feels like a decision that would make the likes of Boris Johnson and Donald Trump blush,” she said.

Speaking in the House of Commons on Tuesday, Kendall accepted the findings of the ombudsman, in a report earlier this year, that her department failed to communicate the change adequately.

But she rejected its recommendation for a flat-rate compensation scheme, paying out £1,000 to £2,950 to the more than 3 million women affected.

“Given the vast majority of women knew the state pension age was increasing, the government does not believe paying a flat rate to all women at a cost of up to £10.5bn would be fair or proportionate to taxpayers,” Kendall told MPs.

Asked about the issue in an interview with broadcasters, Starmer said: “I do understand, of course, the concern of the Waspi women. But also I have to take into account whether it’s right at the moment to impose a further burden on the taxpayer, which is what it would be.”

The Liberal Democrats’ work and pensions spokesperson, Steve Darling, called the decision a “day of shame” for Labour.

“The new government has turned its back on millions of pension-age women who were wronged through no fault of their own, ignoring the independent ombudsman’s recommendations, and that is frankly disgraceful,” he said.

John Major’s Conservative government in 1995 passed legislation to gradually increase women’s state pension age from 60 to 65 between 2010 and 2020 to match men’s, with the changes speeded up in 2011 to come into force by 2018.

But Waspi campaigners have long argued that those born between 1950 and 1960 saw the shift introduced without adequate warning. In particular, they have argued that some women received no letter, personally informing them of the plans.

Kendall agreed with the ombudsman’s finding of maladministration over the DWP’s tardiness in writing to affected individuals but she claimed the letters in themselves, “aren’t as significant as the ombudsman says”.

She said survey evidence suggested the vast majority of women in the relevant age group knew of the plans for the state pension age to increase.

After the ombudsman’s report was published earlier this year, neither Rishi Sunak’s Conservative government, nor Labour, would confirm whether they would go ahead with compensation.

But Kendall’s Conservative shadow, Helen Whateley, told MPs that Labour had to take ownership of the decision not to fund such a scheme.

“Let’s be clear, the decision to provide no compensation is the government’s decision and they need to own it,” she said.

Under Jeremy Corbyn’s leadership, Labour included compensating the Waspi women in its 2017 and 2019 manifestos. When that point was raised with Kendall in the Commons, she said that her party had lost both of those elections.