DAVID Cameron must promise an "in-out" referendum on Britain's European Union membership or face defections to the anti-EU UKIP and a challenge to his Conservative leadership, senior party sources have warned.

Mr Cameron, who is against such a poll, is currently polishing a landmark speech on the EU which he is due to make in mid-January, as eurosceptic Tories are preparing for the potentially seismic moment.

Senior sources close to the Prime Minister claim few outwith the Tories at Westminster realise the jeopardy Mr Cameron's premiership is in if he "fudges" the issue.

"Most Conservative MPs and, indeed, most of the country now believe we need an 'in-out' referendum and that if our membership is to survive it has to be on new terms. We have to get back to something like the Common Market; the status quo is not an option. The Prime Minister will have to accede to our demands," said one senior Tory source.

Asked if his leadership would be under serious threat without a pledge to the poll, the insider replied: "Yes. We realise we can't do anything on staging a referendum this side of the General Election [because of the LibDems] but there should be a clear commitment in our manifesto.

"If Britain doesn't get what it wants, then we'll leave. It's now 50/50 as to whether the country will be in the EU in 10 years' time."

Fears are rising that if Mr Cameron fails to clear the high political bar set by the Tory eurosceptics, civil war could break out with the divisions ultimately costing his party the next General Election.

Another senior party figure said the leadership was "in denial about UKIP" and while Mr Cameron's speech was not make-or-break, his leadership was being eroded.

Conservative Philip Davies insisted an in-out referendum on membership was now inevitable and argued an in-in poll, offering the status quo, would be "a joke".

The Yorkshire MP said: "It's absolutely vital he gives a clear, unequivocal commitment, with no wriggle room, that in the next parliament, if we win the General Election, there will be a referendum on Europe when David Cameron will put to the public his new negotiated deal with the EU or we get out of the EU altogether."

The MP said that if the Prime Minister did not spell this out in January, UKIP would win the 2014 European elections.

His colleague Stewart Jackson said Mr Cameron had "very little capital in the bank" on Europe in terms of his party and the country at large.

"He is increasingly taking a Blairite approach and setting himself up against his party. This is particularly dangerous given he did not win the election," insisted the MP.

The eurosceptic Mr Jackson said Mr Cameron had to give firm assurances and a timescale for an in-out poll or his leadership would be under threat. He added: "People's patience has run out. If he can't deliver on Europe, people will judge him quite harshly and he should be wary of putting himself in that position."

Adam Holloway, a Kent Tory MP, said Britain should return to a common market approach, but added it would be "ridiculous" for the UK to completely withdraw from the EU.

Senior party sources claimed some Conservative MPs could defect to UKIP, which is looking to post good results in the 2013 English county council elections and the 2014 European elections.

Some UKIP figures believe that if Mr Cameron were to fudge the issue next month, then there could even be a realignment similar to that in the early 1980s when the SDP broke away from Labour.

Nigel Farage's UKIP recently pushed the Liberal Democrats into fourth place in one poll.

Nick Clegg, the Deputy Prime Minister, warned the Tories to concentrate on fighting the "firestorm" in the eurozone rather than trying to re-negotiate Britain's EU membership. He said holding a referendum while Britain's and Europe's economies were being repaired was putting the cart before the horse.

He said: "It's an exercise of political shadow-boxing to try to anticipate a process of which we're not one of the principal authors and then start prescribing how we should react to it."

Shadow Foreign Secretary Douglas Alexander warned the Coalition was "more focused on leaving the EU than leading it".

He said: "Instead of negotiating with European partners, David Cameron still seems to be spending his time negotiating with his own backbenchers.

"He should be advancing a broad agenda of reform to negotiate a deal that is good for Europe and best for Britain."

In October, Mr Cameron survived the largest Tory rebellion on granting a referendum on Britain's membership when 81 backbenchers revolted. Half of those Tories not on the so-called Government pay-roll vote defied their leader. Two junior members of the Coalition resigned.

Herman Van Rompuy, the European Council President, warned the Tories about seeking to repatriate powers away from Brussels, saying it could lead to the EU falling apart.

He said: "If every member state were able to cherry-pick those parts of existing policies that they most like, and opt out of those that they least like, the Union in general, and the single market in particular, would soon unravel."