David Cameron should urgently consider a pact with UKIP to try to prevent them threatening the Tories at the next election, his elections adviser says.
Michael Fabricant suggests offering an in/out referendum on UK membership of the EU if UKIP promises not to stand against Tory candidates in 2015.
He argues such a deal could give the Tories 20-40 additional marginal seats.
But UKIP leader Nigel Farage appeared to reject the suggestion, tweeting: "No deals with the Tories: it's war."
In an internal report to the prime minister the senior MP, who oversees campaigns on the ground, details the threat that UKIP now poses and says they have to stop the "continued haemorrhage of Conservative votes" to the party.
He says UKIP are not likely to win seats in parliament but it is clear the party is costing the Tories votes in crucial marginal constituencies.
'Pragmatic'"The United Kingdom Independence Party (UKIP) is now a significant contributory factor in costing the Conservative Party victories in marginal seats," his report says.
"It is time to consider actively whether a rapprochement might be possible before the 2015 general election."
The deal he proposes is that the Conservatives would promise a referendum in the run up to 2015. In return, UKIP would not stand against Tory candidates.
Mr Fabricant writes: "Such an offer would not be a sign of weakness by the Conservative Party. It would be a pragmatic extension of existing philosophy from a party of government."
He acknowledged such a deal would with the "unpopular" with the Lib Dems - who are governing in coalition with the Conservatives until 2015 and oppose an in-out referendum - and therefore "the timing of any such declaration would be critical".
Mr Fabricant, who was a whip until leaving the government in September's reshuffle, believes the move could help secure the Conservatives a majority after the next election.
'Written in blood'Earlier this year, UKIP leader Nigel Farage said he was open to the idea of a pact but demanded a referendum pledge "written in blood".
End Quote Boris Johnson Mayor of LondonWith great respect to the "in-outers", I don't think it does boil down to such a simple question"
He said any future "deal" with the Conservatives would be difficult, because he claimed Mr Cameron opposed a "full, free and fair" vote.
But on Sunday, Mr Farage said the party would abandon its pledge not to stand against Eurosceptic Tory MPs after Mr Cameron refused to retract comments describing UKIP members as mostly "closet racists".
This followed the revelation that Rotherham council had removed three children from a foster couple because they belonged to UKIP.
Later Mr Farage appeared to reject the idea of a pact outright when he said on Twitter: "No deals with the Tories: it's war."
And in response to a message from Mr Fabricant he said: "Cameron's comments over the Rotherham case mean a deal's simply not possible."
Mr Fabricant replied: "Nothing can happen for at least 24 months. I'm a great believer in never saying never."
'Fresh consent'The prime minister has committed to seeking what he called "fresh consent" in a national vote but he has so far resisted the idea of an in/out referendum.
Mr Cameron has received backing for his position from Mayor of London Boris Johnson.
Mr Johnson previously suggested he was in favour of an in/out referendum at the "right moment" but he told the BBC on Sunday he now believed the issue was not as "simple" as that.
"I don't think it is as simple as 'yes/no' now," he told Radio 5 Live's Pienaar's Politics. "Suppose Britain voted tomorrow to come out, what would actually happen.
"We would still have huge numbers of staff trying to monitor what is going on (in the EU), only we would not be able to sit in the Council of Ministers and we would not have any vote at all. Now I don't think that is actually a prospect that is likely to appeal.
"With great respect to the "in-outers", I don't think it does boil down to such a simple question."
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