Nick Clegg has condemned proposals to make it easier for businesses to fire workers, saying he has never supported the scheme.
There is no evidence that creating "industrial-scale insecurity" among workers will help secure new jobs, according to the Deputy Prime Minister and Lib Dem leader.
His comments are likely to fuel divisions within the coalition over the controversial "compensated no-fault dismissal" scheme, contained in a report for Vince Cable's Business Department by venture capitalist Adrian Beecroft.
Speaking at a Sutton Trust conference on social mobility in central London today, Mr Clegg said: "I don't support them and I never have. I've not seen any evidence that creating industrial-scale insecurity amongst millions of workers is a way of securing new jobs.
"So far, there's just no evidence that in the highly flexible labour market that we have, comparatively speaking, for instilling greater insecurity and let's be blunt, fear, amongst workers, at a time of great economic anxiety as a way of fostering new employment."
Mr Clegg said he has yet to see evidence that the scheme would boost jobs, but added: "If someone shows the evidence - we have asked for evidence - then I am a politician who tries to abide by evidence, then let's look at it again."
His comments come the day after Mr Beecroft's report was published.
It was released early after being leaked.
The report calls for compensation to be capped at £12,000 for employees removed under the scheme, which Mr Beecroft said would make it more acceptable to workers and unions and eliminate many employment tribunal cases for constructive dismissal.
But as the report was published, Mr Cable dismissed the scheme as "complete nonsense".
Tory MPs have suggested that the move would encourage businesses to hire workers by removing concerns that may not be able to afford to get rid of under-performing staff.
Downing Street has made clear that David Cameron has not dismissed the proposal out of hand.
A spokeswoman said the Prime Minister was weighing up options for making it easier for businesses to employ people and achieve growth, but was not "wedded" to any particular solution.
The document was commissioned by the Business Department and submitted in October, but it has been kept under wraps amid reports of friction between Tory and Lib Dem ministers.
Business Minister Mark Prisk told MPs that 17 of its 23 recommendations were already being put into action.
Mr Cable has called for more evidence on controversial elements of the package, including the no-fault dismissal scheme, with submissions due to be completed by June 8.
In a statement as the 16-page report was published, he made clear he regarded the hire-and-fire plan as "counter-productive".