The former chancellor of the exchequer, Lord Lawson, has called for the UK to leave the European Union.
Writing in the Times, he said British economic gains from an exit "would substantially outweigh the costs".
He predicted any changes achieved by David Cameron's attempts to renegotiate the terms of the UK's relations with the EU would be "inconsequential".
But Downing Street said the prime minister remained "confident" that his strategy "will deliver results".
Mr Cameron is facing calls to bring forward a promised referendum on the UK's EU membership.
He says he will hold a vote early in the next parliament - should the Conservatives win the next general election - but only after renegotiating the terms of the UK's relationship with the EU.
However, Lord Lawson said any such renegotiations would be "inconsequential" as "any powers ceded by the member states to the EU are ceded irrevocably".
The BBC's political editor Nick Robinson said Lord Lawson's intervention was a "big moment" in the EU debate.
Regulatory 'frenzy'The peer - who was Margaret Thatcher's chancellor for six years - voted to stay in the European Common Market, as the EU was known in 1975, but said: "I shall be voting 'out' in 2017."
He said he "strongly" suspected there would be a "positive economic advantage to the UK in leaving the single market".
End Quote Lord LawsonYou do not need to be within the single market to be able to export to the European Union, as we see from the wide range of goods on our shelves every day"
Far from hitting business hard, it would instead be a wake-up call for those who had been too content in "the warm embrace of the European single market" when the great export opportunities lay in the developing world, particularly Asia.
"Over the past decade, UK exports to the EU have risen in cash terms by some 40%. Over the same period, exports to the EU from those outside it have risen by 75%," he added.
Withdrawing from the EU would also save the City of London from a "frenzy of regulatory activism", such as the financial transactions tax that Brussels is seeking to impose.
Lord Lawson said his argument had "nothing to do with being anti-European".
"The heart of the matter is that the very nature of the European Union, and of this country's relationship with it, has fundamentally changed after the coming into being of the European monetary union and the creation of the eurozone, of which - quite rightly - we are not a part.
"Not only do our interests increasingly differ from those of the eurozone members but, while never 'at the heart of Europe' (as our political leaders have from time to time foolishly claimed), we are now becoming increasingly marginalised as we are doomed to being consistently outvoted by the eurozone bloc."
'Clear timetable'At the local elections last week, the UK Independence Party - which campaigns for the UK to leave the EU - made substantial gains, while the Conservatives lost control of 10 councils.
The UKIP surge prompted a call from senior Tory MP David Davis to bring forward the planned referendum - while other Conservatives, including former chairman Lord Tebbit, urged Mr Cameron to take steps to give the public more confidence that a referendum would indeed take place if he wins the next general election.
Reacting to Lord Lawson's comments, a Downing Street spokesman said: "The PM has always been clear: we need a Europe that is more open, more competitive, and more flexible; a Europe that wakes up to the modern world of competition. In short, Europe has to reform.
"But our continued membership must have the consent of the British people, which is why the PM has set out a clear timetable on this issue."
'Serious divisions'Deputy Prime Minister Nick Clegg said that leaving the European Union would "make us less safe because we cooperate in the European Union to go after criminal gangs that cross borders".
He said it could put 3m jobs at risk and made it difficult to deal with cross border threats like climate change and would also see Britain "taken less seriously in Washington, Beijing, Tokyo".
UK Independence Party leader Nigel Farage said Lord Lawson's intervention "legitimised" his party's longstanding argument that the UK could prosper outside the EU while exposing "serious divisions" in the Conservatives.
Former Labour Europe minister Peter Hain said he totally disagreed with EU withdrawal but believed Lord Lawson was right in suggesting David Cameron's approach could not succeed as "EU members will not agree Treaty changes".
Political commentator and Times' comment editor Tim Montgomerie told BBC Radio 4's Today programme the article would add fuel to the debate on Europe within the Conservative Party that Mr Cameron had hoped could wait until further down the line.
"Lord Lawson will give much more confidence to those people who do want to leave the EU to go public with those views," he added.
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