The private meeting took place shortly after Easter and was called by the two Tory grandees, both known for their Europhile views.
The disclosure of the private talks will spark fury among Hague loyalists, who hope that Mr Heseltine, facing deselection in his Henley constituency over his support for the Euro, will be forced to stand aside before the next general election.
The discussions were held between the two former Tory ministers and the rebel MEPs John Stevens and Brendan Donnelly. Both Mr Heseltine and Mr Clarke said that their aim was to persuade the rebel Tories to dissolve the pro-European rival party.
"It was at Michael's and my request," said Mr Clarke, who was last week campaigning for the Conservatives in Arundel, Sussex. "We tried to talk them out of the campaign. They tried to talk us into giving them some support, which we refused.
"I am very annoyed that they have used my picture and my quotations in their leaflet. I have spent the last six months trying to get them to drop it."
Mr Heseltine said: "Ken and I have done everything we can to persuade John Stevens and Brendan Donnelly not to pursue their present course. I don't believe in putting candidates up against the Conservative Party."
Earlier this year, Mr Hague warned party members that any backing for the rebels would lead to expulsion. The tough stance was seen as a warning to Mr Heseltine and Mr Clarke.
Viscount Cranbourne, the former Tory leader in the House of Lords, was sacked by Mr Hague last year for having "unauthorised" talks with government officials over Lords reform.
The revelation follows the disclosure earlier this year that Mr Heseltine has held secret meetings with Tony Blair to plan tactics on preparing the ground for British entry into the European single currency.
Mr Clarke also infuriated Tory MPs when it emerged that he had held a private meeting with Gordon Brown, the Chancellor of the Exchequer.
Mr Stevens set up the breakaway Pro-Euro Conservative Party in protest at William Hague's Euro-sceptic stance and his party's pledge to keep Britain out of the single currency.