Business Secretary Vince Cable has warned that Europe could be plunged into war if the euro was to collapse.
The senior Liberal Democrat said the consequences would be "incalculable" and said there was "no automatic guarantee" that Europe would not disintegrate into conflict.
His warning came as Defence Secretary Philip Hammond said a mood was hardening against Europe among ministers, after Education Secretary Michael Gove apparently told friends he would vote to quit the EU in an in/out referendum.
Vince Cable was speaking about the euro, austerity and the economy at the Cheltenham Literature Festival
The government is expected to announce at the beginning of next week that it will exercise an opt-out from a raft of around 130 EU-wide crime, justice and policing policies.
Cable, speaking at the Cheltenham Literature Festival, said that the consequences of quitting the EU would be "absolutely incalculable.".
"We tend to forget, until we were reminded last week of that Nobel Prize, the European project was constructed in order to rescue Europe from extreme nationalism and conflict.
"There is no automatic guarantee that won't return."
The minister described the euro as "very valuable" and had to be maintained - otherwise Britain would suffer.
"We are not in the eurozone so we cannot directly influence it. We will be heard very loudly if it does unravel," Cable told the audience.
"My sense is that the Germans in particular realise how much is at stake.
"A series of sensible measures have been taken in recent months.
"I think deep down there is enough common sense and a sense of survival to prevent this getting out of control.
"If it does, I'm afraid the consequences for us will be awful."
University students march during a rally against austerity measures affecting education budget outside the Greek parliament in central Athens
But the Business Secretary said there was only so much the Government could do to prevent a financial crash happening again.
"We are only 2% of the world economy," he said.
"So what happens in China or the eurozone has massive implications for where we are.
"If they go badly wrong it will hurt us, regardless of what we do at home.
"I think we have to have a certain amount of humility of about what we can accomplish domestically, although we can keep trying."
Cable's comments came as the Mail on Sunday reported Gove had told friends that he believes Brussels should be told:
"Give us back our sovereignty or we will walk out."
The newspaper reported that Gove, a close confidant of Prime Minister David Cameron, had told friends he would vote to quit the EU if there was an immediate in/out referendum.
And it quoted a "well-placed source" as saying: "Michael thinks it is about time we spelled it out, in simple words that even Brussels bureaucrats can understand, that we won't tolerate this any longer.
"We have to tell them if they don't return some of the important powers they have snaffled from us, we will leave."
As a major trading nation the UK would have "considerable bargaining power" even outside the EU, they added.
"The point that Michael is reflecting - and many of us feel - is that we are not satisfied with the current relationship," Defence Secretary Hammond told BBC1's Andrew Marr Show.
"The mood has changed...because for the first time in a decade, those of us who are uncomfortable with the way that relationship has developed see an opportunity to renegotiate it.
"It makes sense for Britain to be in the single market but to reset the relationship so we have a balance of competences which works for Britain and the British people."
Protestors gather near Parliament against austerity measures announced by the Spanish government in Madrid
Cameron is opposed to an in/out poll and backs continued membership but - under intense pressure from within his party for a public vote - gave his strongest hint yet last week that there could be a referendum on a new-look relationship.
He said a referendum would be the "cleanest, simplest, neatest" way of resolving question marks over Britain's future in the organisation, but warned it would not take place before the next election.
Tory backbenchers have welcomed reports that the Government could confirm formally as early as Monday that it will exercise an opt-out from a raft of EU-wide crime, justice and policing policies.
Dominic Raab, who was among the leaders of a 100-strong group which demanded the move in a letter to the premier earlier this year, said it was a chance for a new relationship "based on practical cooperation not giving up democratic control".
"Given rising demand for Britain to renegotiate its wider relationship with the EU, this is a test for them as much as it is for us," he said after it was reported Home Secretary Theresa May could detail the plan to MPs on Monday.
Under the terms of the opt-out secured in the Lisbon Treaty, Britain must choose either to stick with or pull out from the entire package - including the European arrest warrant.
Negotiations would then be required to secure re-entry to any elements considered good for the UK.
But the move threatens to open a fresh rift within the conservative/Liberal Democrat coalition.