The European Commission president on Wednesday vowed that he would make transforming the EU into "a political union, with a coherent foreign and defence policy" his mission, adding that it would require an overhaul of the EU's treaty.
"Let's not be afraid of the words: we will need to move towards a federation of nation states. This is what we need. This is our political horizon," he told the European Parliament in Strasbourg.
"We will present explicit proposals for the necessary treaty changes ahead of the next European parliamentary election in 2014. We must use the 2014 election to mobilise all pro-European forces. We must not allow the populists and the nationalists to set a negative agenda."
To rapturous applause from MEPs, Mr Barroso added: "We need to have this vision, vision of a medium term, longer term EU that is a federal path."
Mr Barroso's call for a new constitutional treaty follows Angela Merkel's demands for a political union to centralise the EU in order to avoid future debt crises threatening Europe's single currency.
His timetable for bringing forward a proposal for a new EU constitution could not be worse for David Cameron, the Prime Minister, as it would come in the run-up to a general election in 2015 and put the deeply divisive issue of Europe at the top of the political agenda.
In 2014, the government also faces a difficult decision on whether to use a block opt-out of 130 EU crime and policing laws, including the unpopular European Arrest Warrant that has recently led to allegations of miscarriages of justice.
In the same year, the government publishes an audit on Brussels powers and the impact of European regulation which will fuel a heated debate of whether Britain is better off inside or outside the EU.
European elections in June 2014 will rock the coalition government by bringing deep disagreements between Conservatives and Liberal Democrats over the EU into the open as the Eurosceptic Tories face losing heavily to Ukip over claims that Mr Cameron is soft on Europe.
A senior source told The Daily Telegraph that Whitehall officials and government lawyers had already begun considering how to deal with areferendum on a "recommendation that Britain stays in the EU without joining a political union".
Coalition divisions were highlighted when Andrew Duff, a Lib Dem MEP and president of the Union of European Federalists, welcomed Mr Barroso's proposals.
"The president of the European Commission has done well to drop his former inhibitions about the 'F-word'. His call for Europe to follow a federal path is absolutely right," he said.
Mr Barroso's call for a European federation has triggered fresh calls for a popular British vote on the EU, which would be the first referendum on Europe since the 1975 plebiscite on the "Common Market".
Douglas Carswell, the Conservative MP for Clacton, said that the government could no longer dodge the question now that the issue of a United States of Europe had publicly been put on the agenda.
"It is clear now what the EU is trying to do. The question for David Cameron is does he want to be part of it and when is he going to give us a say in a referendum."
Mats Persson, the director of Open Europe, said: "His call for a federal Europe clashes head on with the increasingly sceptical UK public and political class."
Nigel Farage, leader of Ukip accused Mr Barroso of supporting an "emerging, creeping European dictatorship".
"The only good news I take from today, is you've helped to bring that referendum just a little bit closer," he said.----
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