David Cameron faces a revolt by his MPs this week as they form a new group calling for the Conservative Party to end its "near obsession" with immigration and attempts to "outdo" Ukip.
More than a dozen MPs, led by the backbencher Mark Field, will unveil the group Conservatives for Managed Migration on Tuesday. They are warning that the Government's "arbitrary" cap on immigration numbers risks damaging the economic recovery and sends the wrong message about what the Tory party stands for.
The launch comes on the eve of the hotly awaited debate on Britain's membership of the EU between Ukip leader Nigel Farage and Deputy Prime Minister Nick Clegg, with Mr Farage likely to try to exacerbate splits inside the Conservatives on Europe and immigration.
With the rise in support for Ukip has come tougher rhetoric from both the Conservatives and Labour, who fear that Mr Farage's party could steal marginal seats at the general election. A poll for The Independent on Sunday last week predicted that Ukip will top the popular vote and scoop up seats in this May's European elections. Last summer, the Home Office, sanctioned by Tory ministers, produced vans telling illegal immigrants to "go home", a move which enraged Conservative MPs on the left of the party.
Mr Field said yesterday that the immigration cap pledged by Mr Cameron to reduce numbers to the "tens of thousands" was "undeliverable" and kept out the most talented academics and entrepreneurs from outside the EU. The group's message echoes calls by London Mayor Boris Johnson for a sensible debate about immigration for fear of putting off scientists and business owners from India and China.
Mr Field, the MP for the Cities of London and Westminster, added: "The rumbling threat of Ukip has only stiffened the resolve of mainstream parties to keep tough talk on immigration firmly on the front pages. The tone of debate suggests there is no middle ground between rabid, drawbridge-raising right-wingers and soft liberals bent on scrapping immigration controls.
"In such a febrile atmosphere it has become almost impossible to have the rational debate we need. The relentless focus on immigration by the Conservative Party seems to the outsider to border on near-obsession." Mr Field warned that talking tough on immigration risked wreaking "economic damage" to the UK.
On Wednesday, Mr Clegg and Mr Farage will go head to head on LBC radio in the first of two debates on Europe. Ed Davey, the Lib Dem Energy Secretary and a close ally of Mr Clegg, said the DPM would tell Ukip that the "facts are against them".
Mr Davey said: "The facts and the evidence are in favour of Britain's membership. I think Nick in the debate will make the case for Britain's membership of the European Union in a very strong way, based on jobs, based on the environment, on things like tackling crime."