A British exit from the European Union in favour of a looser arrangement like Norway's would still mean handing over money to Brussels and do nothing to curb migration, Downing Street sources said.
The Prime Minister will fly to Iceland today for a meeting of northern European countries from inside and outside the EU, where he is expected to continue to push his case for changes to the UK's relationship with Brussels.
Both Iceland and Norway are outside the EU but are part of the European Economic Area, which gives them access to the single market.
But in return they have to abide by EU rules and contribute money to Brussels' coffers - around 600 million euro (£432 million) a year in Norway's case.
David Cameron is expected to have talks with the leaders of both Iceland and Norway at the Northern Future Forum, a grouping which also includes EU members Denmark, Estonia, Finland, Latvia, Lithuania and Sweden.
Norway is regarded by some eurosceptics as a model for the UK if it votes to leave the EU.
But a Number 10 source said Norway currently accepts around three-quarters of EU rules with little say in the decisions made in Brussels.
"Unlike the UK, Norway has no veto in the European Council, no votes in the EU's council of ministers, no MEPs or votes in the European Parliament, and no European commissioner to help," the source said.
Norway is also signed up to Europe's free movement rules, the source said, so a similar arrangement for the UK would do little to reduce the number of EU migrants heading to Britain.
Norway takes in "over twice as many EU migrants per head as the UK" but unlike Britain it has "no votes and negligible say" over the rules.
The source said: "So how would becoming like Norway in anyway help addressing public concerns over EU migration?
Number 10 highlighted comments from senior Norwegian politicians about the prospect of a looser relationship to Brussels.
In January last year Norwegian prime minister, Erna Solberg said: "I don't believe that Great Britain ... should consider becoming a member of an organisation which basically means that laws and rules which are made in other countries are implemented directly."
Mr Cameron will have a meeting with his Icelandic counterpart Sigmundur Gunnlaugsson this evening before the forum formally starts.
The main working sessions on Thursday will focus on support for the creative industries and innovation in public services.
Mr Cameron will take the opportunity to push his reform agenda in meetings with the leaders of the EU nations present in Reykjavik.
The Prime Minister's official spokeswoman said: "This will be an opportunity as well as talking about the business of the Northern Future Forum for the PM to have some discussions with the EU leaders there about the UK re-negotiation.
"That is what the PM is focused on. He has been clear that he thinks there are reforms we can secure to address the concerns of the British people and that it is the UK's interest to be in a reformed EU."
Dominic Cummings, director of the Vote Leave campaign, said his group did not support the "Norway option" for the UK if the public backed severing ties with Brussels in the in/out referendum promised by Mr Cameron.
"After we vote leave, we will negotiate a new UK-EU deal based on free trade and friendly co-operation," Mr Cummings said.
"We will end the supremacy of EU law. We will bring back control including over trade deals and migration. This is safer than voting to remain which means giving more power and money to Brussels every year."