No 10 adviser Adrian Beecroft has launched a stinging attack on Vince Cable after his proposals to scrap unfair dismissal were vetoed by the Liberal Democrats.
His report on employment law, which had suggested giving bosses the right to fire employees indiscriminately, had been described as "bonkers" by the business secretary.
Now Mr Beecroft has hit back with a Telegraph interview in which he accuses Mr Cable of being "one of the left".
"I think people find it very odd that he's in charge of business and yet appears to do very little to support business," he said.
Britain's economy will grow by as much as five per cent less than if the measures to give businesses more freedom over employment law had been implemented, Mr Beecroft believes.
He claimed the country was being "hugely held back by the Lib Dems", who he believes are being allowed to unfairly dominate government policy.
"Nick Clegg is always threatening to go nuclear and dissolve the whole thing if he doesn't get his way with this, that and the other," Mr Beecroft continued.
"Which you'd think actually must be a hollow threat. Therefore, why can't the government be more robust? I don't know what the answer is. But it is disappointing."
The Treasury did not escape criticism either, being accused of a lack of "commercial nous".
Mr Beecroft said he did not see chancellor George Osborne's team as a "driver of growth", because No 11 was "fixated" on raising money.
He used the example of putting VAT on alterations to listed buildings as an example, suggesting that the Treasury might have been more sensible to announce the tax would be added in two years' time rather than immediately.
"If you were thinking commercially, you'd say, OK, the building industry is on its knees, I know, let's announce that in two years' time we’re going to put VAT on alterations to listed buildings and then that'll be a big boost.
"And we'll probably get as much tax, because all of the people doing the work will pay tax and so on and so forth... there's just a sort of lack of commercial nous."
Mr Beecroft's claims about the negative impact of his report not being adopted have been questioned in some quarters.
The Chartered Institute for Personnel and Development's summer 2011 labour market outlook found that 44% of employers cited public sector spending cuts, and 40% of employers cited candidates lacking the right skills, as obstacles to business growth. Twenty-five per cent cited employment regulation.
The government is currently consulting on Mr Beecroft's proposal on no-fault dismissals. Businesses have until June 8th to submit their views.
Business minister Mark Prisk told the Commons on Monday: "The government are taking positive action to reform the labour market and to ensure that we can help more people get back to work as soon as possible."
Shadow business secretary Chuka Umunna replied: "We agree that improvements can be made to the way in which employment tribunals operate, for the sake of employees and employers, but we do not think that watering down people’s fundamental rights at work is a substitute for a growth strategy."