Simon Danczuk was photographed drinking pints with the Ukip leader, who has already persuaded two Tory MPs to switch to his party.
But Rochdale MP Danczuk said he was "solidly Labour" and was "definitely not" about to join Farage's party.
According to The Sun on Sunday the two politicians spent an hour chatting to each other in the Anchor Tap pub near Tower Bridge in London.
The newspaper reported that Farage drank three pints of Samuel Smith's Old Brewery bitter while Danczuk was on lager during the meeting.
Danczuk said the Ukip leader was "probably the most successful politician of 2014" because of his party's election victories.
"He has had a good year in the European elections, the local elections, overtaking the Liberal Democrats in the opinion polls.
"Whether you like it or not they are the third party in British politics.
"Some people in the mainstream parties needed to wake up to this some time ago.
"The reality is it's four-party politics."
He said the need to address the rise of Ukip had helped Labour focus on immigration again.
Danczuk said: "People often talk about Ukip having halted (David) Cameron's modernisation programme, but I think it's also interesting to reflect on how Ukip has impacted on the Labour Party."
He added: "The truth is the Labour Party has always been bothered about immigration, wanting to devise policy to address immigration, from Keir Hardie through to Jim Callaghan in the 1960s."
The "laissez faire approach" to immigration was a "New Labour phenomenon", he added.
The Ukip leader last week defended a former parliamentary candidate who stood down after being recorded using derogatory terms about homosexuals and Chinese people.
The Ukip leader said that Kerry Smith was "not suitable" to stand for election to Parliament for the party, but insisted that his comments were not made with malice.
Smith stood down as candidate for South Basildon and East Thurrock - regarded as one of Ukip's most winnable target constituencies - earlier this month after the release of a recording of a phone call in which he mocked gay party members as "poofters", joked about shooting people from Chigwell in a "peasant hunt" and referred to someone as a "Chinky bird".
He later resigned as a party member.
Farage told LBC: "I think we are very snobbish in London about condemning people for the colloquial language they use, particularly if it's not meant with really unpleasant intent."
Danczuk said language of the type used by Smith was "wholly inappropriate" for someone in public office.
But he added that politicians should not pretend that kind of language was not used by members of the public.
"If politicians have not heard members of the public use words like this, they clearly have not been getting out enough," he said.
The Rochdale MP insisted he was in the correct political party - but indicated that he thought some of his colleagues would be better off elsewhere.
"I'm more Labour than a lot of the Labour Party," he said. "I'm solidly Labour, but there are a lot of people who are more Liberal than Labour."