Labour former cabinet minister Lord Mandelson has attacked the "UK isolation party" and the "provisional wing" of the Conservatives for forcing David Cameron into making his referendum promise, accusing them of running a "Sopranos-style protection racket."
Following a week of Tory wrangling over Europe the former Northern Ireland secretary said leaving the EU would be a "great setback economically for Britain" and warned that an in/out referendum would be a "lottery" which could result in the UK severing ties with Brussels.
He told the Andrew Marr Show: "The UK isolation party and their fellow travellers in the Conservative Party are operating a Sopranos-style protection racket inside the Conservative Party.
"They are saying do what we want, give us what we are demanding or we are going to burn your home down.
"In my view the Prime Minister has got to say enough is enough, you guys have got to clear off, take your tanks off my lawn, I am going to lead this party and govern this country in the way that serves its true economic national interest and I'm going to do so without being bullied around by a bunch of people whose only interest is to be separate from Europe but not to create the prosperity for Britain and the trade and other economic opportunities by staying within Europe and its single market."
He said Labour was right not to offer an in/out vote "just for the sake of having a referendum".
Pressure continued to mount on the Conservative leadership over claims an ally of David Cameron described grassroots activists as "mad, swivel-eyed loons" who forced Tory MPs to adopt hardline stances on divisive issues.
Party co-chairman Lord Feldman was forced strenuously to deny making the alleged comments after rumours swirled on the internet that he was responsible, and Downing Street also insisted no one at Number 10 had made the remarks.
Grant Shapps, who shares the party chairman role with Lord Feldman, questioned the accuracy of the potentially incendiary remark reported in a number of papers, claiming: "I don't believe it's ever been said."
Health Secretary Jeremy Hunt insisted the Tory party was "absolutely united" on the issue of Europe. He refuted remarks made by Lord Howe who claimed David Cameron was losing control of his party as the Conservatives' "long, nervous breakdown" over Europe continues.
Hunt told BBC1's Andrew Marr Show: "If you look at the substance of the issue, the Conservative Party is absolutely united.
"We look at the European Union and we worry about Britain's ability to compete in the global race, we look at the regulations and the red tape that comes from Europe, yesterday some new regulation about selling olive oil in restaurants.
"If you go into the boardrooms in New York or Tokyo or Singapore they think the European economy is frankly a joke."
Mr Cameron was "showing leadership" on Europe by promising to work to change the relationship with Brussels and the Tories were the only party prepared to "do the heavy lifting on this".
Mr Hunt added: "Of course we have a debate. Patriotism runs deep in the veins of all Conservatives and when you have qn issue of sovereignty it's something we debate fiercely."
But he said "don't underestimate David Cameron" because he had shown through his use of the veto and securing a cut in the EU budget "this is someone who has delivered a very great deal".
Tory former Cabinet minister John Redwood told the programme: "We are very happy with the policy of negotiate and decide. What we want is for him to get on with the negotiation.
"We want this new relationship and to make sure the new relationship is a good one that most British people can accept, that has to be put to the British people - do you want the new relationship or would you simply rather simply not be part of it at all."