The UK must be ready to "stand up... and walk away" if it is unhappy with talks over its relationship with the European Union, Foreign Secretary Philip Hammond has said.
He told the Daily Telegraph agreement was possible on such issues as curbing EU migrant numbers into the UK.
He said "substantial, meaningful reform" to immigration rules could happen without a treaty change.
But the UK would not have "unfettered" border controls while part of the EU.
Mr Hammond also told the newspaper he is having behind-the-scenes talks with European politicians to establish what their "red lines" might be ahead of British renegotiation.
UK Prime Minister David Cameron wants to renegotiate the terms of the UK's continued membership of the EU before holding an in-out referendum, if he remains in power after next year's general election.
Mr Hammond said: "If your ambition is that we have total, unfettered control of our own borders to do what we like, that isn't compatible with membership of the European Union, it's as simple as that.
"And people who advocate that know jolly well it is not compatible with membership of the European Union. So if that's what you want, you're essentially talking about leaving the European Union."
However, he added: "If what you want is the ability to avoid the kind of destabilising movements that we've seen over the last decade or so - large waves of migrants settling in concentrations that puts pressure on public services... if that's what we want to deal with, I think there are ways we can agree to deal with these things with our partners in Europe.
"We're in the beginning stages of a negotiation and - first of all, never, never go into any negotiation unless you're prepared to stand up from the table and walk away. We have to be prepared to."
In a speech delivered to the CBI last month, Prime Minister David Cameron said he wanted the UK to belong to a Europe that addresses people's concerns, including concerns like immigration.
He also said that "these things can be negotiated" and a referendum would "give the British people a proper choice about staying in a reformed European Union or opting not to belong to it".
But he added that "simply standing here and just saying, 'I will stay in Europe. I will stick with whatever we have, come what may' - that is not a strategy, that is not a plan and that won't work".