David Cameron should consider a pact with UKIP, his elections adviser says.
Michael Fabricant suggests offering an in/out referendum on UK membership of the EU if UKIP promises not to stand against Tory candidates in 2015.
But No 10 said Mr Fabricant "did not speak for the party on this issue.... the safest way to protect Britain's interest is to vote Conservative".
UKIP leader Nigel Farage said it was "difficult" to envisage a pact while David Cameron was Conservative leader.
In an internal report to the prime minister the senior MP, who oversees campaigns on the ground, details the threat that UKIP now poses and says the party is costing the Tories votes in crucial marginal constituencies.
He says an electoral pact with UKIP - in which the Conservatives would promise a referendum after 2015 and in return UKIP would not stand against Tory candidates - could help the Conservatives win an extra 20-40 seats at the next election.
He told the BBC he wanted "an open debate" about the issue and no decision would have to be taken before 2014 at the earliest.
"There is clear evidence that some Conservative votes are to going to UKIP," he told the BBC. "That is not very logical because the best deal, if you want a good deal in Europe, is to vote Conservative.
"The trouble is some people are not doing that. They think that they can get a better deal by voting UKIP."
He rejected suggestions that talk of a pact was a sign of Conservative weakness or an attempt to put pressure on the prime minister over an EU referendum. "I am coming from a position of strength. I am not talking losing votes but about gaining votes and gaining seats."
He acknowledged such a deal would be "unpopular" with the Lib Dems - who are governing in coalition with the Conservatives until 2015 and oppose an in-out referendum - and therefore "the timing of any such declaration would be critical".
Mr Fabricant, who was a whip until leaving the government in September's reshuffle, believes the move could help secure the Conservatives a majority after the next election.
'Written in blood'
Earlier this year, UKIP leader Nigel Farage said he was open to the idea of a pact but demanded a referendum pledge "written in blood".
But on Monday, he said he did not really trust Mr Cameron to deliver a referendum and urged him again to retract comments made in a 2006 interview in which he described some UKIP members as "closet racists".
"It is very difficult to see how you could ever do a deal with someone who was consistently rude about you," he told the BBC's Daily Politics.
While UKIP and the Conservatives had fundamental differences on policy, Mr Farage said he would be more inclined to talk to the Conservatives if they had a different leader.
"Cameron is the major obstacle," he added. "If someone pragmatic, grown-up and sensible like Michael Gove was leader, then you might think we could sit round the table and have a proper discussion."
A Downing Street source said: "Michael Fabricant does a great job campaigning in by-elections but he doesn't speak for the party on this issue.
"The safest way to protect Britain's interests is to vote Conservative. That's why we'll have Tory candidates in every seat at the next election."
The prime minister has committed to seeking what he called "fresh consent" in a national vote but he has so far resisted the idea of an in/out referendum.
Mr Cameron has received backing for his position from Mayor of London Boris Johnson.
Mr Johnson previously suggested he was in favour of an in/out referendum at the "right moment" but he told the BBC on Sunday he now believed the issue was not as "simple" as that.
"I don't think it is as simple as 'yes/no' now," he told Radio 5 Live's Pienaar's Politics. "Suppose Britain voted tomorrow to come out, what would actually happen.
"We would still have huge numbers of staff trying to monitor what is going on (in the EU), only we would not be able to sit in the Council of Ministers and we would not have any vote at all. Now I don't think that is actually a prospect that is likely to appeal.
"With great respect to the "in-outers", I don't think it does boil down to such a simple question."