She said: "It was more about the distinction between words and action, and I think that is a fair assessment for voters to make."
Clinton said it is "sometimes difficult to understand what Senator Obama has said because as soon as he is confronted on it, he says that's not what he meant".
John Edwards, former North Carolina senator and Democratic presidential candidate, took advantage of the spat and asked: "Are there three people in this debate, not two?
"This kind of squabbling ... how many children is this going to get health care? How many people are going to get education because of this? How many kids are going to get to go to college because of this?"
Edwards received cheers from the crowd as he said: "I respect both of my fellow candidates, but we have got to understand this is not about us personally."
The debate was sponsored by CNN and the Congressional Black Caucus Institute.
Each candidate is trying to gain support from South Carolina's African-Americans, who make up almost half of the Democratic primary voters.
The majority of South Carolina black Democrats are leaning towards Obama, according to a CNN/Opinion Research poll released on Friday.
The poll suggests that nearly 60 per cent of black registered Democrats are backing Obama, with 31 per cent supporting Clinton.
This is a shift from October, when African-Americans backed Clinton over Obama, with 57 per cent to 33 per cent.
South Carolina is a chance for Clinton to build on her momentum from wins in Nevada, New Hampshire and Michigan, before "Super Tuesday", a day of primary elections in nearly two dozen states on February 5.
Most polls though give Obama, who won the Iowa caucus, a double-digit lead over Clinton in South Carolina.
Edwards finished second in Iowa, but he has yet to win any states. He hopes to have a win in South Carolina, his native state.
He won the primary election there when he made his first bid for the White House in 2004.
Clinton and Obama directed some of their responses at each other instead of the panel of moderators.
|John Edwards, right, is yet to win |
a Democratic primary [AFP]
Clinton said: "It is very difficult having a straight up debate with you because you never take responsibility for any vote."
Clinton said this after attacking Obama for not supporting a senate amendment that would have capped the interest rate on credit cards at 30 per cent.
Clinton drew boos from Obama supporters when she said it was difficult to get a straight answer from him.
Exchanges got even more heated when Clinton said that Obama had represented a "slum landlord business" in Chicago when he was practicing law.
On Iraq, Clinton said she is looking to bring US troops back home, starting within 60 days of her becoming president, if she gets elected.
"There is no military solution, and our young men and women should not remain as the referees of their [Iraq's] conflict," she said.
Edwards said that within his first year as president he would have all combat troops and all military bases out of Iraq.
Obama responded by saying: "I want to be as careful getting out as we were careless getting in, but I want to make sure that we get all of our combat troops out as quickly as we can safely."