Two senior Conservative cabinet ministers call for Britain to threaten to leave the European Union

Britain should threaten to leave the European Union altogether unless significant powers are returned to the UK, two senior Conservative cabinet ministers have suggested.

Today the Home Office is expected to announce it is "minded" to exercise a block opt-out from new European Union powers including the controversial European Arrest Warrant.

But several senior Tory Cabinet ministers have indicated that they want the Government to much further and threaten to pull of the EU entirely - unless significant existing powers are repatriated.

Philip Hammond, the Defence Secretary, said the "mood had changed" among senior ranks in the Government.

"The point…many of us feel is that we are not satisfied with the current relationship," he told the BBC.

"The mood has changed...because for the first time in a decade, those of us who are uncomfortable with the way that relationship has developed see an opportunity to renegotiate it.

"It makes sense for Britain to be in the single market but to reset the relationship so we have a balance of competences which works for Britain and the British people."

His comments came after Michael Gove, the Education Secretary told friends he would vote to quit the EU if there was an immediate in/out referendum.

"Michael thinks it is about time we spelled it out, in simple words that even Brussels bureaucrats can understand, that we won't tolerate this any longer," they were quoted as saying.

"We have to tell them if they don't return some of the important powers they have snaffled from us, we will leave."

William Hague is currently leading a cross Whitehall audit of EU powers which could be clawed back by the Government including areas such as immigration, working hours and human rights.

However the Tories are very unlikely to get agreement from the Liberal Democrats on a joint negotiating position with other EU leaders ahead of the next election.

Mr Cameron is opposed to an in/out referendum and backs continued membership but has hinted his party could go into the next election with a promise of a referendum on a new-look relationship.

Today's announcement by Theresa May will confirm Britain intends to take up its rights under the Lisbon Treaty to opt of new justice and home affairs powers by 2014.

The Government will then decide which specific powers to opt into which are feels are in the national interest.

A Liberal Democrat source said this had still to be agreed between the Coalition partners.