In his first newspaper article since returning to the Conservative frontbenches last week, Mr Clarke said the Prime Minister and Chancellor were rushing out announcements designed to shore up the economy and the banking system "without any detail or proper thought".
He accused the PM of treating voters like fools by allowing junior ministers to go on television and declare that they could see "the light at the end of the tunnel" or the "green shoots" of recovery.
Mr Clarke's comments came as City minister Lord Myners launched an outspoken attack on the banks for "mismanagement" contributing to the economic downturn which this week officially tipped the UK into its deepest recession since the early 1980s.
US President Barack Obama yesterday used his first radio and Internet address from the White House to promote his own economic stimulus plan, which is designed to inject 825 billion dollars into the American economy.
Mr Obama warned Congress that failure to approve and implement the package quickly could damage the prospects of millions of people.
"If we do not act boldly and swiftly, a bad situation could become dramatically worse," warned the President.
In recent weeks, Downing Street has repeatedly sought to draw parallels between the active intervention planned by President Obama and the multi-billion pound packages of bank bail-outs, VAT cuts and help for home-owners offered by Mr Brown.
But writing in the News of the World, Mr Clarke said: "Right now, Gordon Brown and Alistair Darling are panic-stricken.
"And because they're panicking, they're rushing out announcements without any detail or proper thought."
He added: "Instead of giving straight answers, Gordon Brown has made the mistake of having his junior ministers tour the TV studios, trotting out a series of damaging cliches.
"The public are not fools, and they see these soundbites for what they really are: a smokescreen."
Mr Clarke said he agreed to David Cameron's call to return to the political front line after 11 years on the backbenches because he wanted to be "out on the pitch, fighting for the change that Britain needs".
He warned: "Britain faces the gravest economic crisis that I have known in my lifetime - deeper than the one I tackled when I was Chancellor in the 1990s."
And he said that the "acid test" for Tory business policy should be how it will help struggling small firms to create jobs.
Figures released on Friday showed the UK economy contracted by 1.5% in the final three months of 2008, sparking fears of a deep and prolonged recession.
Output has not fallen so badly for more than 28 years, with the economy last suffering a bigger plunge in the second quarter of 1980 when the UK was battling soaring unemployment and inflation at the start of the Thatcher era.
The fourth quarter plunge comes after a 0.6% fall in gross domestic product (GDP) in the previous three months of 2008 - a "technical" recession, as defined by two successive quarters of negative output.
Lord Myners yesterday blamed "mismanagement" at the banks, where he said senior executives were "grossly" overpaid and had little sense of the society around them.
He told The Times he could see no economic justification for the "exponential" rises in banking executives' pay over the past 20 years and said that there should be no return to the massive bonuses paid out by the banks.
"The golden days of huge bonuses in the investment banking arms are gone," he said.
Lord Myners also revealed that the banking system came close to a collapse in October last year when the Government stepped in with a £500 billion rescue package to shore up confidence.
"We were very close on Friday, October 10," he said. "There were two or three hours when things felt very bad, nervous and fragile.
"Major depositors were trying to withdraw - and willing to pay penalties for early withdrawal - from a number of large banks."
Asked if misbehaving banking bosses should pay back bonuses or lose knighthoods, Lord Myners said "that's a decision for individuals".
He said: "I have met more masters of the Universe than I would like to, people who were grossly over-rewarded and did not recognise that. Some of that is pretty unpalatable.
"They are people who have no sense of the broader society around them. There is quite a lot of annoyance and much of that is justified.
"Let us be quite clear: there has been mismanagement of our banks."
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