Philip Hammond has said the Government is keeping "all our options open" over Britain's future in the European Union as it emerged that 50 Tory MPs are poised to lead the campaign for Britain to quit.
The Foreign Secretary said the EU was "not fit for the the 21st century" but insisted that it was "fixable" and could be flexible when it "puts its mind to it".
Leaving the door open for the referendum on membership to be staged next year, he said the poll would be staged as soon as David Cameron had secured a package of reforms.
Asked if he could campaign to leave the EU, Mr Hammond said the Prime Minister had been "very clear that he rules nothing out".
He told BBC 1's Andrew Marr Show: "If our European partners were to simply block us and say look we can't do any of this stuff, we can't meet any of your demands, we can't fix this relationship between Britain and the European Union then, of course, we have got to keep all our options open."
Mr Hammond said treaty change was needed to protect any reforms Britain secures from "judicial attack".
"We have made clear we will go ahead with the referendum as soon as we are ready. As soon as we have got the package agreed we will have a referendum campaign and the referendum," he said.
Mr Hammond said Britain was looking for a system were a group of countries could operate a "red card" system over plans drawn up in Brussels.
"Our experience is that the European Union when it puts its mind to it can be quite flexible and quite effective. We have actually had two treaty changes since 2010 on issues which eurozone members wanted to get done.
"So, they can do these things when they want to do them. We expect some hard positions to be set out at the beginning of the negotiation but this is a negotiation and we will press our partners on these points.
"We will see where we can get to by the end of the negotiating period."
Former Cabinet ministers Owen Paterson and John Redwood are among backers of the newly formed Conservatives for Britain (CfB) that will initially support the Prime Minister's bid to renegotiate terms of membership for the UK.
But the groups stands ready to lead the charge for exit if the deal the premier secures fails to gain major changes such as regaining control over British laws and free trade powers.
Asked about the CfB, Mr Hammond said: "There was always going to be a group of our colleagues who wanted to come out of the European Union come what may. That is not where the Government is. That is not where the majority of British people are."
MPs backing the group are reported to have met twice in Parliament since the election and MEP supporters are due to hold a meeting in Strasbourg on Wednesday. Outline plans have been drawn up that state the CfB "support the party's policy of renegotiation and referendum" but "take an optimistic, globalist view of the UK's future" and "will discuss how to prepare for a possible 'out' campaign".
Conservative MP Steve Baker, the campaign's Westminster chairman, said: "Conservatives for Britain supports the Prime Minister in seeking fundamental change in our relationship with the EU.
"The Conservative Government has promised the British people an in/out referendum on Britain's EU membership and we must explore the possibility of leaving if the EU do not agree to radical reform."