DAVID Cameron is confident that his pledge to renegotiate a deal with Brussels will "deliver results", No 10 has insisted, after Lord Lawson, the former Conservative Chancellor, increased the pressure on him by calling for Britain to quit the European Union altogether.

The Prime Minister said he welcomed the renewed focus on the Tories' policy on Europe after Lord Lawson's dramatic intervention, which Ukip insisted had "legitimised" its position in favour of withdrawal. One Tory backbencher, Jacob Rees-Mogg, suggested Mr Cameron might offer Ukip a coalition deal and make leader Nigel Farage, deputy prime minister.

Lord Lawson, who served as Chancellor from 1983 to 1989, is by far the most senior Tory to call for Britain to leave the EU. He said the economic gains from withdrawal would "substantially outweigh the costs" and predicted that the PM's attempts to renegotiate the UK's membership terms with Brussels would be "inconsequential".

The Tory peer explained that while he voted for Britain to join the EU in 1975, the nature of its relationship had fundamentally changed given the creation of the single currency.

"Not only do our interests increasingly differ from those of the eurozone members but, while never 'at the heart of Europe' – as our political leaders have from time to time foolishly claimed – we are now becoming increasingly marginalised as we are doomed to being consistently outvoted by the eurozone bloc. So the case for exit is clear," Lord Lawson argued.

Nick Clegg responded by warning that withdrawal from the EU "would make us less safe and less prosperous", risking three million jobs. He also made a political jibe aimed at the Conservatives, saying they were "struggling to work out how to deal with Ukip" and kept changing their minds; "one moment they want to be in the European Union, now senior Conservatives like Nigel Lawson say they want to go out".

Later, the ex-Chancellor dismissed Mr Clegg's warning of job losses, saying: "That's poppycock but I don't think Nick Clegg, who is a charming young man, has ever purported to know anything at all about economics."

Meanwhile, Mr Cameron sought to play down suggestions Lord Lawson's remarks had been unhelpful. "It has been a good day for the pledge I have made that, if re-elected, I will hold an in/out referendum," he said.

His spokesman made clear that while the PM believed he could make progress in talks with Brussels, the subject of Britain's rebate was off the table. He also said the Bill to establish the referendum would not go through Westminster ahead of the 2015 election.

Last night, Angus Robertson for the SNP claimed the anti-independence campaign had been "impaled by its own arguments" in the wake of Lord Lawson's intervention. "By allying himself with a right-wing eurosceptic party, Alistair Darling wants to take Scotland down a path which will lead to it becoming isolated in the UK when what we need is a strong voice in Europe with independence," he said.