The row came after the Prime Minister and the Chancellor pushed for a Bill on the UK's membership of the EU to be included in May's Queen's Speech, Downing Street has confirmed.
The Liberal Democrats are opposed to the move, viewing it as a sop to the Conservative europsceptic right.
Mr Cameron has pledged to hold an In/ Out referendum on the UK's EU membership in 2017, if he is returned to Downing Street at the next general election.
But his promise is not enough for his backbenchers - who want a vote to be enshrined in legislation.
They are also furious that Labour and the Liberal Democrats talked out a similar Bill in the Lords a few weeks ago, causing it to fall.
The row came as the two Coalition parties talked through the contents of the upcoming Queen's Speech at Cabinet yesterday.
A spokesman for the Prime Minister confirmed that an EU referendum Bill had been discussed.
He said that it was not "any secret that Conservative members of the Cabinet would want to see an EU referendum bill" and that with regard to Liberal Democrat opposition "there wasn't a change in positions".
There were also reports that Mr Cameron had stolen Lib Dem Business Secretary Vince Cable's confirmation of a rise in the national minimum wage.
Mr Clegg is due to say in a speech today that isolationists "cannot and won't deliver reform" on the EU.
He will also accuse UKIP MEPs of voting against laws that will "put money back in the pocket of British consumers and protect the from cross-border crime."