David Cameron has opened the door to a historic referendum on Britain’s future relationship with the European Union — declaring that voters need a “real choice”.

The Prime Minister uses an article in The Sunday Telegraph to say that Britain is in danger of getting swamped by EU legislation and bureaucracy which he would like to see scrapped. He makes clear for the first time that changes will need the “full-hearted support of the British people” down the line and adds: “For me the two words 'Europe’ and 'referendum’ can go together.”

Mr Cameron’s landmark move comes as Liam Fox, the former defence secretary, prepares to up the stakes by calling for an immediate renegotiation of Britain’s relationship with the EU. If other member states fail to back this solution, Dr Fox believes, there should be a referendum with the government recommending pulling the UK out of the EU.

This newspaper has learned that Dr Fox, the standard bearer of the Tory right, will tell activists tomorrow: “For my own part, life outside the EU holds no terror. We have not moved the goalposts. But they have been moved nevertheless. We must now respond.”

The former cabinet minister’s clarion call is likely to be greeted with delight by Eurosceptics on the Right of the party — a constituency which Mr Cameron has had difficulty in the past convincing that he is on the correct track.

The dramatic developments come in the wake of last week’s Brussels summit in which leaders of the eurozone countries took the first steps toward a rescue plan for the single currency. At the same time, approximately 100 Conservative MPs wrote a letter to the Prime Minister calling on him to legislate for a referendum on Britain’s relationship with the EU to be held in future years. Many of Mr Cameron’s most senior aides have been urging him to take such a step for several months.

At a news conference following the summit, however, the Prime Minister ruled out a straight “in or out” referendum on Britain’s membership of the EU, saying it was not the right thing to do. His comments alarmed many in his party, with backbenchers predicting he would have to perform a U-turn.

Senior advisers to Mr Cameron insisted last night that this misrepresented his views and that his article sets out his true thinking — that a referendum is possible when the time is right.

The Prime Minister also signals that he will use his speech to the Tory conference in October to spell out the areas where he wants Britain to claw back powers from Brussels — a move which will be cheered by party activists. He pledges: “Let us start to spell out in more detail the parts of our European engagement we want and those to end.”

Detailed plans for repatriating powers — a key point of difference between the Tories and the Liberal Democrats —are likely to be spelled out in the Conservative manifesto either for the 2014 European parliamentary elections or the 2015 general election, or both.

Mr Cameron argues that an in or out referendum is not the right choice because the “vast majority of the British people” wants changes to the current relationship with the EU.

“The fact is the British people are not happy with what they have — and frankly neither am I,” he writes. “Put simply, for those of us outside the eurozone, far from being too little Europe there is too much of it. Too much cost, too much bureaucracy, too much meddling in issues that belong to nation states or civil society or, indeed, individuals.

“Whole swathes of legislation covering social issues, working time and home affairs should, in my view, be scrapped.”

The Prime Minister says, however, that “tactical and strategic patience” is needed – partly because his party is in coalition with the pro-European Lib Dems and partly because the eurozone crisis is taking most of the EU closer towards full integration. He adds: “There is more to come – further moves, probably further treaties – where we can take forward our interests, safeguard the single market and stay out of a federal Europe.

“How do we take the British people with us on this difficult and complicated journey? How do we avoid the wrong paths of either meekly accepting the status quo or giving up altogether and preparing to leave? It will undoubtedly be hard going, but taking the right path in politics often is.

“As we get closer to the end point we will need to consider how best to get the full-hearted support of the British people, whether it is in a general election or a referendum. “As I have said, for me the two words 'Europe’ and 'referendum’ can go together, particularly if we really are proposing a change in how our country is governed, but let us get the people a real choice first.”

The Prime Minister also declares: “We need to recognise that Europe is changing – and fast. The single currency is driving a process that will see its members take more and more steps towards fuller integration. They are necessary if the euro is to survive, but mean that the EU and relationships within it will have to change.”

Dr Fox, who resigned as defence secretary in October 2011 after revelations about his links with his friend and former adviser, Adam Werritty, will take a much starker view in his speech tomorrow. In extracts given in advance to The Sunday Telegraph, he agrees with the Prime Minister that Britain’s interests are not served by its current relationship with the EU and also says a that an in/out referendum soon would be a “huge error” with enormous tactical risks.

Where Mr Cameron calls for tactical and strategic “patience”, however, Dr Fox calls for an immediate renegotiation of Britain’s relationship with the EU – a union which he argues has “fundamentally changed” because of the eurozone.

He adds: “I would like to see Britain negotiate a new relationship on the basis that, if we achieved it and our future relationship was economic rather than political, we would advocate acceptance in a referendum of this new dynamic. “If, on the other hand, others would not accede to out requests for a rebalancing in the light of the response to the euro crisis, then we would recommend rejection and potential departure from the EU.

“For my own part, life outside the EU holds no terror. I believe globalisation will increasingly force countries to cooperate more closely on the basis of functional commonality rather than geographical proximity. It would, though, given our economic interdependence be to the advantage of all to create a more stable and mutually agreed compromise.”

Dr Fox plans to use stirring rhetoric in his call for action, claiming: “There will be those who say that this is the wrong time and that it is politically difficult or even impossible. These are the perpetual arguments for inertia. This is not the time for party political games or tactical point scoring.

Our national interest is at stake and that trumps all other considerations. We must all rise to the challenge.” Mr Cameron has had an increasingly tricky relationship with his party’s Eurosceptic right. Last October he was hit by a large-scale rebellion in the Commons as 81 Tory MPs defied party whips in a vote for a referendum on Britain’s membership of the EU.

Two junior government aides resigned their posts as parliamentary private secretaries. The Prime Minister recovered some ground in December when he wielded Britain’s veto at a Brussels summit to thwart plans for a new Treaty on closer EU integration because of insufficient safeguards for the City of London. He was hailed as a hero by many of his party’s MPs for his use of the veto, which opened up a major rift inside the coalition, with loud protests from the Lib Dems.

However, Mr Cameron was later accused of retreating from his tough stance as further negotiations continued. A Tory opinion poll “bounce” which coincided with his use of the veto melted away as Labour began to build large leads. In today’s ICM poll for The Sunday Telegraph, 68 per cent of voters say there should be a referendum before any further transfer of power from the UK to the EU.----

Source: http://www.telegraph.co.uk/news/worldnews/europe/eu/9367381/EU-New-Tory-battle-lines-drawn.html