Lib Dems go on the offensive over Europe amid criticism of Campbell's leadership

The Liberal Democrats have called for a referendum on whether Britain should remain in the European Union in an attempt to settle the issue once and for all.

Sir Menzies Campbell, the Liberal Democrat leader, rejected Tory calls for a public vote on the proposed EU treaty. His surprise move is aimed at calling the Tories' bluff by drawing Eurosceptics into a debate about Britain's place in Europe.

It comes amid pressure from some Liberal Democrat MPs and MEPs for the party to back a referendum on the treaty because it promised one on its forerunner – the EU constitution blocked two years ago by "No" votes in France and the Netherlands.

The Tories accused Sir Menzies of distracting attention from his performance on the eve of his party's annual conference in Brighton which starts tomorrow.

Last night the Liberal Democrat leader dismissed suggestions that he was under pressure, saying that such talk "goes with the territory" and always happened before the party's conference. In a BBC Radio interview he said: "I will lead the party through the parliament, through the next election and into the next parliament." In his statement on Europe, he called for an end to the "shadow boxing" on the issue and said it was time for an honest debate. He promised to lead the campaign for Britain to stay in the EU.

He said: "I am not prepared to allow David Cameron to lead the Europhobes and their allies in sections of the media, to distort the debate on Europe without challenge. He tries to pose as a champion of the people but in truth he wishes to restrict the British people to a choice on a narrow question about a treaty of far less significance."

In its present form, he said, the substantial differences between the draft treaty and the constitution mean that a referendum was not needed.

"If there is to be a referendum it shouldn't be restricted to a comparatively minor treaty. It must be a decision about the EU as a whole," Sir Menzies said. "Let's have an honest debate on the European Union followed by a real choice for the British people. That means a referendum on Britain's membership of the EU. We would ask the British people the big question – whether to remain in the European Union or not."

Gordon Brown is resisting a referendum on the treaty, arguing that it is not the same as the original constitution on which all three main parties promised a public vote in their 2005 election manifestos. But the Prime Minister the pressure to agree to a referendum increased this week when the TUC voted for one at its annual conference.

UKIP, which wants Britain to leave the EU, welcomed the Liberal Democrats' call. Nigel Farage, the party's leader, said: "I have believed for some time that the only referendum that Gordon Brown will ever consider would be one with the new constitutional treaty as a continued part of our EU membership. Brown believes that this is the only referendum on the EU that he can win. The parliamentary arithmetic means that if the Liberal Democrats support such a move it would give the British people their first chance in over 30 years to determine their own futures."

But Derek Scott, the chairman of the I Want a Referendum campaign, said: "The Liberal Democrats want an honest debate so they must not try to force people into a false choice between giving even more powers to the EU and leaving altogether. The overwhelming majority of people in Britain want to co-operate in Europe but not give more powers away."

The Tories were unmoved, and reiterated their call for a public vote on the treaty. William Hague, the shadow Foreign Secretary, said: "This proposal is a clear sign of desperation from Ming Campbell, whose party is so split on this issue.

"The Liberal Democrats promised a referendum on the EU Constitution. They should concentrate on making sure that promise is kept, instead of producing ill thought out distractions on the eve of a difficult party conference."

David Cameron tried to mend fences with Angela Merkel, the German Chancellor, yesterday when he met her for the first time. She had previously declined a meeting in protest at his decision to pull Tory MEPs out of the main centre-right group in the European Parliament in 2009.

At their talks in Berlin, the two leaders agreed that their parties would set up working parties in several policy areas. Mr Cameron said: "Angela Merkel and I had a very positive meeting, where we discussed how centre-right parties can co-operate.

"I am delighted that the Conservative Party and the CDU will be setting up joint working groups covering climate change and environment, security and counter-terrorism, and economic competitiveness."

Ms Merkel and Mr Cameron, who agreed to disagree over the Tories' decision to leave the European People's Party, discussed a number of issues including the fight against terrorism, climate change and the challenges facing the international community in Afghanistan.

The Tory leader accepted an invitation to deliver a keynote speech on security issues at a conference to be opened by the German Chancellor in Berlin on 26 October.