Danny Alexander, the Chief Secretary to the Treasury, openly warned the Prime Minister not to undermine the Liberal Democrats' commitment to Britain's environment after Mr Cameron pledged to "roll back" green taxes.
Downing Street made clear the PM was "determined to do what he can as quickly as possible" to cut green levies, which in turn would reduce household energy bills. An announcement is due in the Chancellor's Autumn Statement in December.
Green levies currently put an average £112 on an annual energy bill. Labour, accusing the Tory-led government of panic, pointed out how £67 of the £112 was accounted for by measures introduced by the Coalition.
Mr Cameron's move on energy costs came less than 24 hours after Sir John Major called for intervention, proposing that, if this winter turned bad, then energy companies should pay an excess profits tax to help keep down the bills of hard-pressed consumers.
The development reinforces the view that the PM is under intense political pressure to do something more to help consumers and, politically, to counter Mr Miliband's 20-month energy freeze plan, which is popular with voters.
During a rowdy Prime Minister's Questions, Mr Cameron, challenged by the Labour leader over Sir John's proposal, said: "I want more companies, I want better regulation, I want better deals for consumers. But yes, we also need to roll back the green charges that he put in place as Energy Secretary."
His comments put him on collision course with Ed Davey, the Liberal Democrat Energy Secretary, who earlier this month said it would be "silly" to cut green levies, which helped low-income households install energy efficiency measures.
Mr Miliband accused the PM of "changing his policy every day" and suggested a Bill going through the House of Lords could be amended to introduce quickly his proposed price freeze.
When Mr Cameron accused his opposite number of being a "con man", he was upbraided by the Speaker, who said the remark was unparliamentary.
Meantime, Mr Alexander made clear it was not Coalition policy to cut green taxes, saying: "We have made commitments on environmental levies as a Coalition government. The Conservatives haven't put any proposals to us but we, as Liberal Democrats, will not allow our commitment to the environment or particularly the jobs in Scotland and the rest of the UK that are supported by those things, to be undermined." He added: "There is no commitment to wholesale rolling back of environmental levies, quite the contrary; it's a very important part of our long-term strategy to tackle climate change and support the security of our energy supplies."
In a speech to business leaders, Mr Miliband said Mr Cameron, was showing "weakness and panic" and had "lost control of his government".
He added: "Sir John Major recognises the job of government is to reform markets when they are failing and to protect people. This Prime Minister does not. It will take a Labour government to make the right decisions on behalf of the British people."
Downing Street said an annual review of competition in the energy sector would be conducted by regulator Ofgem, the Office of Fair Trading and the new Competition and Markets Authority. Details would be set out to MPs by Mr Davey next week.
As Green Party MP Caroline Lucas branded Mr Cameron "irresponsible" for seeking to cut green levies, Niall Stuart of Scottish Renewables said the UK Government's own figures show support for low carbon projects amounted to the equivalent of 57p a week on bills. He added: "While Mr Cameron may feel saving the public 57p per week significant, Ed Davey has already made it very clear that investing in renewables and energy efficiency is an essential part of keeping energy bills down in the future."