Nick Clegg has delivered his strongest rebuke so far to Tory eurosceptics hoping to reclaim powers from Brussels.
The Deputy Prime Minister warned that it would be "economic suicide" for Britain to "retreat to the margins" of Europe.
Rewriting the EU's founding texts would open a "Pandora's Box" and leave the continent paralysed when it should be focused on restoring economic growth.
The Liberal Democrat leader's intervention came with David Cameron under massive pressure to bring powers back to Westminster as part of negotiations for any new treaty.
More than 80 Conservative MPs rebelled last week over a call for a referendum on UK membership of the union.
And polls have suggested that two thirds of the public - and 80% of Tory voters - agreed with the rebels.
Writing in The Observer, Mr Clegg said it was clear the 17 eurozone nations were moving towards more fiscal integration and the European landscape was "about to change".
But he complained that "two extremes" were dominating the debate on how Britain should respond.
"On the one hand, there are some who see an opportunity for a more centralised EU, built around a tighter, quasi-federalist core," Mr Clegg wrote. "On the other, are those who imagine a chance for the UK to draw away from the union.
"They relish the prospect of a unilateral raid on Brussels' powers. The irony is that both options require treaty change: Europhiles and Europhobes are clamouring for the same thing.
"As always, neither extreme of the argument is right. Both would have the UK give up our place at the European top table, sacrificing the influence essential to our prosperity.
"It is only by having a loud voice in a united Europe that we can promote the open economy that will deliver growth.
"Being shoved to the margins, or retreating there voluntarily, would be economic suicide: a surefire way to hurt British businesses and lose jobs."
Mr Clegg said there was "sense" in amending the EU's foundations to ensure eurozone members obeyed strict budgetary rules.
But he went on: "Having worked in the EU for years, my concern is that tampering with the EU's founding texts is opening a Pandora's box, leaving us paralysed by ideological battles, institutional navel-gazing and special demands from every member state.
"These are dangerous distractions when our urgent priorities are restoring stability and jump-starting growth.
"We understand the need for stronger fiscal discipline and oversight in the eurozone, but we must see if these objectives can be met by other means."
Mr Clegg roundly rejected the idea that the UK should aim to become the leader of the "outs" - the 10 countries that have not joined the euro.
"To limit our ambition like this would be an extraordinary own goal," he insisted. "Why would we seek to head up a smaller club with a fast diminishing membership? Many of our fellow 'outs' eventually want to become 'ins'.
"More important, we spent years fighting to bring down the walls that divided Europe - it would be damaging to let new ones spring up now.
"From the economy, to climate change, to defence and crime, co-operation between European countries has delivered untold benefits for every single person in the UK.
"Fracturing the EU would undermine those achievements. It should be avoided at all costs."