Business Secretary Vince Cable has dismissed proposals to cut employment rights and make it easier to sack people as "complete nonsense".
Attacking rival MPs who openly support the reforms, Mr Cable said he was opposed to the "ideological zealots who want to encourage British firms to fire at will".
His outburst, which will increase tension within the Coalition, comes as venture capitalist and Conservative donor Adrian Beecroft readies his study into reforming employment law in the UK.
Writing in The Sun, Mr Cable said: "Some people think that if labour rights were stripped down to the most basic minimum, employers would start hiring and the economy would soar again.
"This is complete nonsense."
He added: "British workers are an asset, not just a cost for company bosses. That is why I am opposed to the ideological zealots who want to encourage British firms to fire at will."
Beecroft's study, which was commissioned by prime minister David Cameron, is expected to call for firms to be given more flexibility to make redundancies, and an easing of equality rules to boost job creation.
It is expected to include measures to cap payouts for unfair dismissal, cutting redundancy notice periods from three months to one month, and five days in case of severe emergency, and removal of certain parts of the Equality Act relating to third party responsibility for harassment.
The prime minister has said he is committed to helping businesses employ people and grow, but is not "wedded to one set of proposals or another".
Downing Street said on Monday that: "The Prime Minister has said we should look at all the options to make it easier for people to be employed and for businesses to grow and for people to start up businesses.
"The proposals in the Beecroft Report were part of that and it is clearly a contribution.
"The Government's position on employment law is that it needs to support business, encourage growth and ensure that employment rights of workers are not weakened."
Shadow business secretary Chuka Umunna called for Mr Cable to come before the Commons to clarify the government's position ahead of Beecroft's report.
It is thought unlikely that Mr Cable will be able to respond to the question in person, as he is visiting the North East. A Business Department spokesman was not immediately able to say which minister would attend the Commons in his place.