Eurosceptic claims 200 Tory MPs now favour a British exit from EU

As many as 200 Conservative MPs would be prepared to call for Britain to leave the European Union, one of the party's leading Eurosceptics has suggested, in an escalation of pressure on David Cameron over Europe and immigration.

On Friday, the Prime Minister unveiled a sweeping package of reforms to immigration in an attempt to regain control of the debate from Ukip and appease Conservative MPs. But in a speech to the Eurosceptic Bruges Group, Sir Bill Cash said the extent of MPs agreeing with his position that Britain would be better off out of the EU was far wider than many in Westminster believe and could amount to two-thirds of the parliamentary party.

Until now, it was thought about 100 Tory MPs would be happy to call for a "Brexit" in a referendum in an effort to stop losing their seats to Ukip. In his speech on Friday, which he hoped would be a "game-changer", Mr Cameron announced plans to restrict benefits for EU migrants but stopped short of a cap on numbers, a retreat which angered Eurosceptic MPs. The decision to tone down the reforms came after a warning by Angela Merkel that it would fly in the face of the free movement of workers, and George Osborne, who advised that UK businesses would suffer.

Before the PM's speech, Sir Bill, who has argued that Britain should withdraw from its full membership of the EU and have a free trade agreement with the bloc instead, addressed the Bruges Group's conference Restoring Self-Government to Britain last weekend. In a leaked recording of his words, Sir Bill said: "We've moved the whole argument on the European issue as a result of both analysis and political will, from … when we were in the complete minority to a position where, although you may dispute the exact figure, I probably could myself, but something over 200 Conservative MPs generally agree with what I am saying today. And of course Ukip grew out of all of that too. That's a fact." Sir Bill added that agreeing "associated status" for the UK, where the country has a free trade agreement with the EU instead of full membership, was "still very much on the agenda for a very large number of Conservative MPs".

The MP, who insists he does not want to defect to Ukip, said he believed a formal pact with Nigel Farage's party was unlikely but added he expected MPs of both parties to vote along the same lines in Parliament – something he had discussed with Douglas Carswell, the new Ukip MP for Clacton-on-Sea. He told the conference: "I am not advocating a pact as such, because I just don't think that's credible and by the way they don't want it any more, unfortunately. I have already been talking to Douglas Carswell. He was on the back benches with me voting with me on every single proposal I put forward. Same with Mark Reckless. The fact that they have now gone off with another party doesn't mean to say that generally speaking they are going to vote differently. The plain fact is that there is a huge amount of agreement between the bulk of the back benches in the Conservative party and Ukip."

A Conservative spokesman did not respond to Sir Bill's comments, only referring to what the Prime Minister had said about EU membership. Sir Bill did not respond to a request for comment last night.

Jon Ashworth, Labour's shadow Cabinet Office minister, said: "The danger of a future Conservative government is clear. David Cameron's failure to set out a credible plan for EU reform means he is too weak to prevent the march to economic disaster for Britain. The Tories are once again obsessing about Europe and threatening Britain's national interest in doing so. Rather than focusing on raising families' living standards, Tory MPs want to form a pact with Ukip and drag us out of Europe regardless of the consequences."

Critics of Mr Cameron's speech warned that fellow European leaders would reject the bulk of his reforms because they would still go against the principle of free movement. But yesterday Philip Hammond, the Foreign Secretary, rejected the idea the reforms were unworkable. He told Radio 4's Today: "What we've set out is a set of measures that will make Britain a significantly less attractive destination for job-seeking Europeans." In another intervention, Lord Tebbit called for a new "cricket test" for migrants which would allow into the UK those who fought against the Nazis in the Second World War.