Sir John Major is often seen as a drab and grey figure, however the former prime minister gave a barnstorming performance during a question and answer session with journalists in Westminster on Tuesday, in which he savaged "fantasy land" Tory eurosceptics and defended calling three members of his cabinet "bastards" - on the basis that they were.

The former Conservative leader, who led the country between 1990 and 1997, makes only rare interventions in current domestic politics and used today's speech to launch a direct assault on the right-wing of the party that so troubled him while he was in Downing Street.

"I'm a Conservative, always have been, always will be, and my party is at its best when it is tolerant and open and at its worse when it is hectoring," he said. "David Cameron is seeking to reclaim territory that is at the very heart of the sort of values that made me join the Conservative Party in the first place."

In a direct warning to the Tory MPs (some of whom were in the room) who are unhappy with the more liberal conservatism of Cameron, Sir John said: "If we Tories navel gaze and only pander to our comfort zone we will never win general elections, all the core vote delivers is the wooden spoon."

Sir John praised Cameron's decision to hold a referendum on Britain's membership of the European Union as the "right" thing to do in order to lance the boil that has "bedevilled and poisoned British politics for the best part of the last 25 years". But he said eurosceptic fears of a federal Europe were unfounded and told Tory MPs to focus on more important issues that voters cared about if they wanted to win a majority in 2015.

"Parliament needs to solve this," he said. "And that's why he is right to have a referendum. I think it would be folly beyond belief in a world of seven billion people who are binding more closely together for brave little Blighty to decide suddenly it's going to cut the ties with Europe and cut off Europe and decide to go it alone. I think it would be a very bad decision.

"If we were to leave the EU it is a fallacy of the eurosceptics to say we would just have automatic and easy access to the single market. We will have to pay for access to the single market and we will still have to apply the regulations that Europe produces - into which we would have no input whatsoever."

Sir John also savaged the suggestion that trade with America could replace trade with Europe. "That's totally fatuous, absolutely fatuous," he said. "Every American president that I have known since Ronald Reagan wants Britain inside the EU exercising an Anglo-Saxon instinct for free markets rather than outside sulking. Anyone who thinks America is suddenly going to cuddle us and say 'don't worry we'll look after you' is living in fantasy land."

He added: "We would be marching against the trend of history. I shall campaign to stay in."

In many ways Sir John's time as prime minister was seriously undermined by eurosceptic critics within his party - a conflict captured by his accidental on-camera attack on some members of his cabinet.

He said today: "Calling three of my colleagues, or a number of my colleagues, 'bastards' was absolutely unforgivable. My only excuse is that it was true."

Many Conservative backbenchers want the party to move to the right and increase its attacks on the EU in order to fight off the challenge from Ukip.

However Sir John said: "For the foreseeable future the threat of a federal Europe is as dead as Jacob Marley, the ghost may return but for now there are far more important matters."

"We have been so obsessed in the last 50 years with the economy and Europe we have missed so much of what needed to be done to preserve the social fabric and social well being of the country.

Sir John added: "We Conservatives should show we have a heart and a social conscience and if we do we might not only regain seats that are at present no go areas but far more importantly we might transform lives as a result as mine was once transformed. Politicians [should] focus on issues that actually worry people in their daily lives. We need to hear more on taxes, jobs, education, health and living and less on ideology and Europe."

The former prime minister's assault against Tory euroscepticism drew an instant response from those he was criticising. Backbencher Mark Pritchard said he was "wrong, wrong, wrong" and added that "unless Europe changes and puts people first - UK will vote to leave Europe".

And Bernard Jenkin said: "John Major is wrong to say that the idea of a federal Europe is dead! He ignores the tide of new EU laws and all the speeches of EU Commissioners."

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