Lord Feldman, the co-chairman of the Conservative Party, has denied describing grassroots activists as "swivel-eyed loons". The senior Tory said he was taking legal advice after internet rumours circulated that he had made the remarks.
Reports claimed a senior figure within David Cameron's inner circle made the comments accusing MPs of being forced to take hardline views on issues such as Europe because of pressure from their local associations.
The ally of the Prime Minister said: "There's really no problem. The MPs just have to do it because the associations tell them to, and the associations are all mad swivel-eyed loons."
The comments were made at a private dinner by a figure with "strong social connections" to the Prime Minister, The Times and Daily Telegraph reported. In a statement Lord Feldman, a friend of Mr Cameron's from Oxford University, said: "There is speculation on the internet and on Twitter that the senior Conservative Party figure claimed to have made derogatory comments by the Times and the Telegraph is me.
"This is completely untrue. I would like to make it quite clear that I did not nor have ever described our associations in this way or in any similar manner. Nor do these alleged comments represent my view of our activists. On the contrary in the last eight years of working for the party, I have found them to be hard working, committed and reasonable people. They are without question the backbone of the party. I am very disappointed by the behaviour of the journalists involved, who have allowed rumour and innuendo to take hold by not putting these allegations to me before publication. I am taking legal advice."
The dinner party remarks came after some 114 Tories, plus two Conservative tellers, expressed "regret" that the Government's legislative programme did not contain a bill paving the way for the in/out referendum on EU membership before 2017 promised by Cameron.
Senior party activist Paul Swaddle said: "As president of the Conservative voluntary party 2012/3 and last year's co-chairman of the party conference, I worked closely with Andrew Feldman. "I know him to be the strongest possible advocate of the voluntary party and a man I greatly respect. He fought tirelessly with me to ensure that last year's conference was the best ever for party member engagement.
Tory Peter Bone, one of the sponsors of the amendment to the Queen's Speech, said: "Clearly anyone who takes these views could not possibly want to remain a member of the Conservative Party, even less still want to advise the Prime Minister." He said if the reports were true the person responsible, who has not been identified, would "remove themselves" from their position.
Tory MP Tracey Crouch wrote on Twitter: "I wonder if this 'aide' has ever been a member of an association, delivered a single leaflet, packed an envelope or knocked on a door? My activists are far from being 'swivel eyed loons'. They are hard working people who care passionately about local area & future of country."
Nadine Dorries, who has criticised the "chumocracy" of old friends surrounding Mr Cameron, wrote: "If an MP described activists as mad swivel eyed loons they would be all over the Media. Why don't we know the name of the No10 aide?"
Relations between the party leadership and grassroots traditionalists have been strained by Cameron's support for gay marriage and over the thorny issue of Europe. Many Tories are concerned by the rise of the United Kingdom Independence Party, which made spectacular gains at this month's local elections campaigning on issues which many Conservative traditionalists identify with.
The reports were instantly seized on by Ukip leader Nigel Farage, who wrote on Twitter: "If you are a Conservative supporter who believes in Ukip ideas then your party hates you. Come and join us."
Senior party activist Paul Swaddle said: "As president of the Conservative voluntary party 2012/3 and last year's co-chairman of the party conference, I worked closely with Andrew Feldman. I know him to be the strongest possible advocate of the voluntary party and a man I greatly respect. He fought tirelessly with me to ensure that last year's conference was the best ever for party member engagement."
Party co-chairman Grant Shapps compared the row to the "plebgate" stories surrounding former chief whip Andrew Mitchell and allegations against peer Lord McAlpine which have resulted in libel claims. Shapps told BBC News: "We have seen how these rumours fly around the internet in the past, and that was certainly happening this morning. We saw that with Andrew Mitchell, with Lord McAlpine and actually with a little bit more time it turned out that neither were true. I just say that he has been very clear, I know Andrew (Feldman), he is a very decent guy, I believe him, he is telling the truth, and that for me is that."
Shapps said the story appeared to have originated from a Conservative Friends of Pakistan event and did not deny that somebody may have made the "swivel-eyed loons" comment. Shapps said: "I was not there to overhear a conversation. Secondly, Andrew Feldman, the name that wasn't mentioned in the article but in fact was swirling around the internet earlier, absolutely assures everybody that it wasn't him. I believe him, he is a good guy who I think is very straightforward and honest."
Pressed if he accepted the words were used by somebody Shapps said: "I simply was not there to hear it. Until somebody produces a name, it's impossible to know." Shapps said the story "sounds like it came out of a Conservative Friends of Pakistan dinner, at which presumably a lot of people were there" including Lord Feldman.
He said Lord Feldman's denial "rather draws a line under it". It was "very difficult to combat" stories attributed to unnamed sources, he added.