Senator Fielding voted with the opposition in the upper house to kill the government's original bill, which proposed to boost the income thresholds at which the surcharge kicks in for people without private health insurance from $50,000 to $75,000 for singles and from $100,000 to $150,000 for couples.
The Australian Greens and the other balance-of-power senator, independent Nick Xenophon voted with the government.
Last month the government introduced a revised bill lowering the threshold for singles to $75,000.
Monday, Senator Fielding announced he would support the passage of the Medicare bill through the upper house, along with yet to be introduced legislation supporting the government's tax hike on alcopops due to the global financial meltdown.
"We've put the national interest first, as well as family first," Senator Fielding told reporters in Canberra.
"At the end of the day, if the economy goes down the gurgler, then families are going to be severely worse off."
Australian Greens health spokeswoman Rachel Siewert said her party reluctantly supported the government's revised $75,000 threshold.
She said she understood the government would also agree to an amendment the Greens will move that mandated an annual independent review for three years of the impact of the threshold changes on the public hospital system for three years.
Finance Minister Lindsay Tanner congratulated Senator Fielding on his change of heart, saying the coalition was now out on its own in opposing the tax changes.
"I would urge the opposition to have a think about precisely where it is now positioned," he told parliament on Monday.
"At this stage, the opposition is being given a lesson in economic responsibility by the Greens, by Senator Fielding and by Senator Xenophon."
Health Minister Nicola Roxon said if Opposition Leader Malcolm Turnbull was serious about delivering tax cuts he would direct the coalition to support the bill.
"I call on the leader of the opposition to do more than simply say he believes in lowering taxes and actually instruct his party to vote for this measure to provide this relief to 330,000 Australians across the country," she told parliament.
"We put out the challenge: do you want to lower those taxes because here is the opportunity."
Speaking to the revised bill in parliament on Monday, opposition health spokesman Peter Dutton said the government's proposed changes would force health insurance premiums up and hundreds of thousands of people into the already stressed public system.
"If this is a government that is hell-bent on destroying the private health industry in this country by forcing hundreds of thousands of procedures onto public hospital waiting lists, they are going the right way about it," he told parliament.
Dutton said the bill was not about a tax cut.
"This bill, make no mistake, is about an attack on the private health insurance industry, it's about an attack from an ideological basis, which in the 21st century is unjustifiable.
Debate on the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No 2) 2008 continues tonight.
Comment was being sought from Senator Xenophon.
