Ministers have criticised Boris Johnson for saying he would not allow "Kosovo-style social cleansing" in London, amid a row over housing benefit reforms.
Many London MPs are concerned the £400-a-week cap will force people out of the city and the Conservative mayor said that would not happen "on my watch".
Vince Cable accused the mayor of using "inflammatory language" while No 10 distanced itself from the comments.
Mr Johnson later said his remarks had been taken out of context.
The row came as MPs debated planned changes to housing benefit, announced in last week's Spending Review, which it is estimated will affect about 17,000 people in London if introduced in full.
Several London-based MPs have attacked the proposed new caps, due to come into effect in April and their likely impact on the poorest people living in the capital.
Mr Johnson, who faces re-election in 2012, told BBC London on Thursday morning that "the last thing we want to have in our city is a situation such as Paris where the less well-off are pushed out to the suburbs".
"I'll emphatically resist any attempt to recreate a London where the rich and poor cannot live together," he said.
"We will not see and we will not accept any kind of Kosovo-style social cleansing of London.
"On my watch, you are not going to see thousands of families evicted from the place where they have been living and have put down roots."
A number of coalition MPs, many representing London constituencies, have concerns about the cap and have called for a rethink on this and other plans such as the 10% proposed cut in housing benefit for people on jobseeker's allowance for more than a year from 2013 onwards.
Earlier this week Labour's Chris Bryant talked about people "being socially engineered and sociologically cleansed out of London" - a remark criticised by Deputy Prime Minister Nick Clegg as deeply offensive to people who had witnessed ethnic cleansing in other parts of the world.
On Thursday Mr Clegg said he "very strongly disagreed" with the way that the London mayor had expressed himself while other Lib Dem ministers went further.
Business Secretary Vince Cable accused him of "inflammatory language on a difficult and sensitive issue" while employment minister Ed Davey called on both Mr Johnson and Mr Bryant to withdraw their comments.
"I think Chris (Bryant) and Boris Johnson should apologise," he told BBC One's Question Time. "The language they are using is appalling. It's scaremongering and their analysis is completely wrong. We should have a grown up and adult debate."
Asked about the prime minister's reaction, No 10 said he "does not agree with what Boris Johnson has said or indeed the way he said it".
BBC political editor Nick Robinson said it was inevitable that once Mr Johnson decided to run again for mayor in 2012 he would have to confront Mr Cameron head on at some stage.
Mr Johnson's office later issued a statement saying he had been "quoted out of context" and was confident that negotiations would result in the reforms being introduced with "minimal problems" for London.
"My consistent position has been that the government is absolutely right to reform the housing benefit system which has become completely unsustainable," it said.
"I do not agree with the wild accusations from defenders of the current system that reform will lead to social cleansing. It will not, and if you listened carefully to what I said, no such exodus will take place on my watch.
"But the point I was making this morning is that London has specific needs due to the exceptional way in which the housing market works in the capital and it is my job as mayor to make the government aware of these."
Ministers have mounted robust defence of the proposals, arguing that the housing benefit bill had got out of control under Labour and people would still be able to claim a maximum of £21,000 a year.
"That is more than the equivalent of what most working families have to spend on their housing costs," Chief Secretary to the Treasury Danny Alexander told MPs during a debate on the Spending Review as a whole.
According to government figures, 21,000 people will be affected by new caps on the amount families can claim for five, four, three, two and one-bed room properties across the UK including 17,000 in London, the majority of whom are out of work.
Housing minister Grant Shapps acknowledged "some people" may have to move as a result but insisted there would be plenty of other properties in their area that would still be affordable under the new conditions.
But Labour has warned that the changes will be "devastating" for hard-working families on low incomes both in and outside London.
"This is much more than a dispute between David Cameron and Boris Johnson," said Shadow Work and Pensions Secretary Douglas Alexander.
"This is an ill-thought out policy which is going to have significant, indeed, damaging effect on the lives of many thousands of families across the country."
And housing charity Crisis said it was a myth to suggest a cap was needed to tackle spiralling payments and that most recipients were unemployed.
"Overall the bill is not 'out of control'", said its chief executive Leslie Morphy. "Costs have risen because rents have risen, in the main driven by the huge rise in house prices over the last decade and a lack of social housing."