Vince Cable has stepped up his row with the Tories over immigration, accusing his coalition colleagues of tending to "fan the flames of prejudice" over the issue.
The Business Secretary's comments on the "toxic" subject came as he threw his weight behind Liberal Democrat calls for changes to make it easier for foreign students to stay and work in the UK, and for immigrants to bring their families to live with them.
Mr Cable's latest intervention comes just days after he was attacked by Immigration Minister James Brokenshire over the Lib Dem minister's belief that the rise in immigration was "good news" for the country.
The Business Secretary said the Lib Dem proposals would help "persuade the public to calm down" about fears of the impact of immigration.
Speaking at the Lib Dem spring conference in York, Mr Cable said: "It was never more necessary to have a party that was willing to stand up on this toxic issue and address it from the point of view of realism and evidence and fact.
"The Labour Party will always hide in a bunker when difficult issues like this come along and the Tories tend to fan the flames of prejudice and then they panic when it gets out of control and parties even further to the right take over.
"We have an acute responsibility here."
He said Liberals had stood up for the rights of immigrants, be they Jews from eastern Europe in the early 20th century, East African Asians and citizens from Hong Kong.
Mr Cable said: "We have got the same challenge today and we have got to meet it. One of the ways of meeting it is to be realistic and address people's genuine concerns."
The Business Secretary backed proposals to allow science, engineering and maths students from outside the European Union (EU) to work in the UK for up to three years after graduating.
The plans would also allow the Migration Advisory Committee to make it easier for people to bring a spouse to join them in the UK.
The proposals would also allow elderly relatives to join their families in the UK as long as they paid a levy to cover their likely health costs.
Mr Cable said it was a "balanced platform, it gives us a platform of credibility with which we can then persuade the public to calm down, accept that immigration - properly managed - is good for our country and it is right that we accept the obligations that go with European membership too".
But there was some criticism of the immigration proposals at the conference, with Northamptonshire councillor Jill Hope warning that the levy on health costs for elderly relatives would amount to "hundreds of thousands of pounds".
"It's a throwaway line and it's completely unworkable," she told the conference.