Nobody in Downing Street made 'loon slur' - No 10
No 10 has denied that "anyone in Downing Street" made comments reported in several newspapers describing Tory activists as "mad, swivel-eyed loons".
The reports claimed a figure close to the PM used the term at a party event in blaming activists for urging MPs to amend the Queen's Speech over Europe.
They sparked anger among grassroots Conservatives, who demanded an inquiry.
Tory chairman Lord Feldman said he was taking legal advice over "untrue" web rumours he made "derogatory comments".
Lord Feldman's fellow party chairman Grant Shapps said it was "very difficult to combat" stories attributed to unnamed sources, adding: "Until somebody produces a name, it's impossible to know."
"I wasn't there to overhear a conversation," he told the BBC, referring to the private event.
Daily Telegraph political editor James Kirkup tweeted: "I stand by my story."'Brilliant volunteers'
"There's really no problem," the person is reported to have said, referring to the fact that 116 Conservative MPs voted against the prime minister earlier this week to express "regret" at the lack of an EU referendum bill in the Queen's Speech.
"The MPs just have to do it because the associations tell them to, and the associations are all mad, swivel-eyed loons."
Conservative associations are the constituency campaign groups made up of local party members.
"Mad, swivel-eyed loons" - it is a phrase that unsurprisingly hasn't gone down well with Tory grassroots activists, who already feel as though the Cameron inner circle does not listen to them or care what they think.
So, if a senior ally of the prime minister did - as some national newspapers have reported - use that phrase to describe members who spend hours knocking on doors around the country, it can only serve to create even more of a disconnect between the party leadership and its foot soldiers. That is why this could be damaging to David Cameron.
Issues like Europe and gay marriage have become something of a rallying call for those Conservatives who do not like the direction in which he has taken the party, and membership has been falling in recent years.
Waiting in the wings, as always, are UKIP and - as Nigel Farage's tweets reveal - he is looking to mop up any disgruntled Tory party members.
Mr Shapps said he had never heard grassroots members described in this way, adding: "We have brilliant volunteers in the party."
A No 10 spokesman said: "It is categorically untrue that anyone in Downing Street made the comments about the Conservative Party Associations and activists reported in the Times and the Telegraph."
In his statement, Lord Feldman said: "There is speculation on the internet and on Twitter that the senior Conservative Party figure claimed to have made derogatory comments by the Times and the Telegraph is me.
"This is completely untrue. I would like to make it quite clear that I did not, nor have ever described our associations in this way or in any similar manner. I am taking legal advice."
Both Mr Shapps and Downing Street said they backed Lord Feldman's position.
Party activists have expressed anger at the reports, and Bob Woollard, chairman of umbrella group Conservative Grassroots, told the BBC there should be a "full-scale inquiry".
"The prime minister should disassociate himself from these comments. If those rumours are true, the person should be sacked," he said.
Mr Woollard said Mr Cameron had surrounded himself with a "metropolitan elite" and modernisers who were out-of-touch with the party membership.
Grassroots members had been subject to "all sorts of derogatory comments" in the past, said Mr Woollard, who had earlier said he had "a lot of sympathy with what Nigel Farage had said when UKIP were criticised similarly".
In 2006, Mr Cameron described the UK Independence Party as "sort of a bunch of... fruit cakes and loonies and closet racists mostly".'So weak'
Reacting to the latest reports, Mr Farage tweeted: "If you are a Conservative supporter who believes in UKIP ideas then your party hates you. Come and join us."
Labour vice-chairman Michael Dugher accused the Conservative Party of being "totally focused on itself".
"We need strong leadership to deal with the big challenges we face as a country, but all we've got is a prime minister that is so weak that he can't even control his party," he said.
Mr Cameron has said he wants the UK to stay in the EU but wants to change Britain's relationship with it, taking back some powers from Brussels.
In the wake of the Queen's Speech vote, Mr Cameron then said his party would give full support to a private member's bill from Eurosceptic backbencher James Wharton outlining the terms of a referendum to be held by 2017.
Speaking to BBC Radio 5 live on Saturday, Mr Wharton described the "loons" comments as the result of a "lapse of judgement", saying they were "offensive and foolish".
"It's such a shallow and inaccurate assessment of what's going on," he said, adding that it did not reflect the reasons behind MPs' decisions to back the amendment.