Sir John Major warns of split between UK and European Union
The case for leaving the European Union will be fuelled further if EU countries do not help the UK limit immigration, Sir John Major has said.
The former prime minister said there was a "very real risk of separation" that would damage Britain and Europe.
David Cameron wants to renegotiate the UK's membership of the EU and hold an in/out referendum by 2017.
In a speech in Germany, Sir John said the UK had a "compelling" case to change the free movement of people.
Mr Cameron is under pressure to limit EU migration, but other countries have resisted his calls to alter the free movement principle.
He has said he will set out by Christmas further plans to curb the rights of EU migrants to work in the UK.
Addressing German Chancellor Angela Merkel's Christian Democrats in Berlin, Sir John - whose Conservative government was dogged by rows over Europe - put the chance of a British exit from the European Union at "just under 50%".
But he said the probability would rise if Mr Cameron, who has promised the referendum if he is prime minister after the general election, could not secure reforms beforehand.
Analysis by political editor Nick Robinson
He was the man who said that Britain's place was at the heart of Europe, the man who watched his party riven by divisions over the issue and the man who says he has not "a shred of doubt that the United Kingdom is far better off inside the European Union."
All the more significant then that it is Sir John Major who is tonight telling an audience in Berlin that the UK "may be poised to leave the European Union" as "for the first time, there is a serious possibility that our electorate could vote to leave the EU."
It was "time to settle our future relationship once and for all", he said, calling the UK's concerns "misunderstood".
People in Britain are not opposed to the principle of free movement, Sir John said, but the number of people coming to the UK could not be absorbed at the current speed.
"It is not physically or politically possible without huge public disquiet," he said.
British governments were always willing to work with Europe on "the big issues", Sir John said, but added: "Our people deeply resent interference in the day to day activities that have been part of the British way of life for generations."
The UK's concerns are "not a political ploy" he said, warning of a "breach that is in no-one's interest".
He said he hoped other European countries would understand Britain's "dilemma", saying: "It can only inflame resentment if we are told our concerns are non-negotiable and we must toe the line."
The former Conservative prime minister said he did not like making this argument, having been "brought up among immigrants in South London", but said he had "reluctantly" accepted the current numbers could not be absorbed, adding that immigration was also a concern to other countries with the rise of what he called "single issue parties".
The UK was looking to qualify, not end, the free movement principle, he said, calling on the EU's "genius for pragmatism" to find a solution.
Labour said Sir John - who was prime minister between 1990 and 1997 - was urging Mr Cameron to "change course".
Shadow foreign secretary Douglas Alexander said: "John Major has today issued a stark warning to David Cameron to stop gambling with Britain's place in Europe and risk undermining Britain's national interest in the process."
But Chancellor George Osborne said "John Major is an experienced ex-prime minister who is agreeing today with what David Cameron has said."
"He says European immigration is a problem, he says that if Britain fights for its interests we could fix that problem, and he says crucially that the British people need to have their say in a referendum."
"That is a referendum only being offered by the Conservative Party at this coming general election."