Britain could survive in the global economy outside the European Union, Iain Duncan Smith has suggested, in an interview likely to add further fuel to Tory rebels' eurosceptic fires.
The work and pensions secretary insisted that with the UK continuing its strong trading relationships with European countries, Britain could "have it all" whether in or out of the EU.
Speaking on BBC1's The Andrew Marr Show, Duncan Smith offered encouragement to Conservative eurosceptics by insisting: "I'm an optimist about the UK, I've always been.
"We're a member of the EU and that gives us benefits, but we have to figure out where that's going."
Conservative backbenchers responsible for the autumn 2011 defeat of the prime minister over Europe, in which 81 MPs rebelled, followed up with another 13-vote Commons defeat for David Cameron last Wednesday over the EU budget.
The prime minister's inability to control his own party on European issues has greatly encouraged passionate Conservative campaigners determined to bring about an in-or-out referendum on Europe.
Cameron has already accepted that a vote could take place, but its timing and wording remain uncertain. Duncan Smith revealed that these questions would be addressed by the prime minister in an upcoming major speech on Britain's relationship with the European Union.
"People should take some reassurance from our prime minister, who I think is standing pretty much foursquare in the middle of public opinion: we don't what to see any more powers ceded over there, but we want to see some powers back," the work and pensions secretary added.
Later this month Cameron will head to the EU negotiating table to seek a real-terms freeze of the EU's spending plans for the 2014-20 period.
Downing Street is playing down his prospects of success, as 17 of the EU's 27 member states are net recipients of the EU budget and so favour a real-terms increase.
Duncan Smith was more upbeat. He said: "The prime minister is on our side, he wants to get the best deal. I think he can get that freeze, that would be a significant start."