Tory vice-chairman Michael Fabricant suggested an electoral pact with the Eurosceptic party, but Mr Farage (pictured) says he could only work with someone pragmatic like Michael Gove.
UK Independence Party leader Nigel Farage today suggested he could form an electoral pact with the Conservatives - but only if they ditch David Cameron as leader.
As the war of words between the two parties escalated, Mr Farage claimed he could work with a new 'pragmatic' leader like Michael Gove.
The row erupted after Tory vice chairman Michael Fabricant, who is in charge of Parliamentary campaigning, warned the Prime Minister a deal with UKIP is vital to reunite 'warring brothers'.
Tory party chairman Grant Shapps 'categorically' ruled out a pact with UKIP.
Mr Farage had rejected an electoral deal with the Tories, declaring 'war' on the Conservatives at the next election.
But today he said the main obstacle to doing a deal was Mr Cameron, who famously once described UKIP as 'a bunch of fruit cakes and loonies and closet racist'
Mr Farage said: 'If Cameron went and somebody pragmatic, grown up and sensible like Michael Gove was leader, you might think then we could sit around the table and have a proper discussion... open-minded, doesn't throw abuse around and thinks issues through - he would be the right kind of person.
'It's very difficult for us to believe anything David Cameron says, because after all, he gave us a cast-iron guarantee that we'd have a referendum [on the Lisbon Treaty] and it hasn't happened,' he told BBC2's Daily Politics.
Yesterday he took to Twitter to reject the idea of being offered a ministerial post in exchange for not standing against Conservative MPs, writing: 'No pact with Tories: it's war.'
He went on to claim that the 'Fabricant deal seems to be based on buying me off. UKIP is bigger than that'.
Mr Farage added: 'I'm in politics because of my beliefs not because I'm a career politician like so many these days.'
Mr Fabricant made his explosive proposal for a pact in a report for Mr Cameron seen by Mail Online. He insisted securing the smaller party's support by committing to an early in/out EU referendum and giving Mr Farage a ministerial position would help the Tories win 20 to 30 extra seats in 2015.
Under the terms of the pact being suggested by the Tory vice chairman, UKIP would agree not to field candidates against Conservative MPs in exchange for the referendum pledge and a Government post for its leader.
He is due to outline the idea over 'social drinks' with Mr Cameron tonight.
But Tory party chairman Grant Shapps insisted no deal would be done. 'I want to win the next election outright of course for the Conservatives so that we have an outright majority and we don’t have to be in coalition,' he told BBC Radio 4’s The World at One.
'But I want to do that with Conservative candidates fighting and winning on their own ground and on their own terms and that is exactly what we are going to do.
'So I can categorically rule out any form of electoral pact with Ukip or anyone else.'
Mr Fabricant insists offering a pact with UKIP 'would not be a sign of weakness by the Conservative Party. It would be a pragmatic extension of existing philosophy from a party of Government'.
'Moreover, this could mark the final rapprochement between warring brothers.'
But Downing Street today slapped down Mr Fabricant, insisting: 'He does not speak for the party on electoral strategy. We will be standing in every seat. There is no thinking about a pact.'
In a sign of growing frustration among Tory backbenchers, MP Stewart Jackson responded on Twitter: 'Electoral strategy?!?! Problem is no one does!'
Tory relations with UKIP have been dire since 2006 when Mr Cameron declared: 'UKIP is sort of a bunch of fruit cakes and loonies and closet racists mostly.'
But Mr Fabricant insisted: 'He [Mr Cameron] wasn't too keen on the Lib Dems either before the last election. Anything is possible.' Mr Fabricant said Mr Farage was a 'former Thatcherite, who sounds like a Conservative, who looks like a Conservative, and in other circumstances probably would be a Conservative'.
But Mr Farage is still furious at the remark, insisting Mr Cameron 'alone in British politics today continues to throw this slur at us that because we believe in not having our law set in Europe and controlling our borders that somehow that is racist'.
'If he wants an electoral war with my party on his immigration open door policy he can have one,' he told Sky News.
The conflict between the two party's has been heightened by the row over the decision by Labour-run Rotherham council to remove three young children from their foster parents because the couple were UKIP members.
The move by social workers from Rotherham Borough Council has prompted condemnation from politicians of all parties. The controversy is expected to boost UKIP's showing in a by-election in the South Yorkshire town on Thursday.
Today, in a statement issued through UKIP, the couple said: 'We are surprised there has been no apology from Rotherham Borough Council and feel they are hiding behind the complexity of this case.'
UKIP earlier blasted a statement from Rotherham council leader Roger Stone as 'saying nothing'.
Councillor Stone said in a lengthy statement: 'This morning I received a report of the immediate investigation that was ordered early on Saturday by the Cabinet member for children’s services.
'Having now listened to the initial report, I am now able to set out the way forward.
'As we said on Saturday, membership of UKIP should not bar someone from fostering.
'The council places the highest priority on safeguarding children, and our overriding concern in all decisions about the children in our care is for their best interests.
'We have been able to establish the facts in this case as far as is possible over the weekend, and I can confirm that the children are safe and in very good care.
'However, this remains a very complex case involving legal advice relating to the decision in question, particular features of the children’s background and an external agency responsible for finding and providing the foster carers concerned.
'The chief executive has this morning invited the senior officials making the inquiries to meet with him and other council officers in Rotherham as soon as possible, so that this information can be rapidly reported to the Secretary of State.
'In order to help the investigation further, we will also make all the facts established so far available to the Secretary of State’s officials.
'The investigation will focus on the information, advice and evidence gathered before making this decision, the nature of the decision itself and how it was communicated.
'This is a sensitive child protection case. It involves both vulnerable children and the foster carers, so the information the council is able to release publicly is limited by law.
'At all stages, however, we will seek to be as open and transparent as possible as we co-operate with the Secretary of State.'
UKIP leader Nigel Farage said that 'without any shadow of a doubt' Rotherham’s head of children’s services Joyce Thacker should lose her job over the row and the children should be returned to the foster parents.
And he indicated that the party is considering legal action to get redress from the council.
Mr Farage told BBC2’s Politics Show: 'I want them to be pardoned, I want the children to be returned to them and, yes, heads should roll.
'Without any shadow of a doubt, (Ms Thacker) should go.'
Commenting on the investigation, Mr Farage added: 'These people are now left in limbo, the children are uprooted once again and heads clearly aren’t going to roll.
'I am concerned that the inquiry is just a means to kicking the can down the road.
'If we are not going to get redress from Rotherham Council, we will have to consider other means. We are going to have to look at the legal route.'
Mr Fabricant's analysis suggests that up to 15 per cent of Conservative voters currently say they may vote for UKIP.
There is particular concern about how well the party will fare in European elections – traditionally its strongest forum – in 2014.
The Tory vice chairman, a former Government whip, told the Daily Mail: 'Discussing matters with different political parties is nothing new.
'After all, the Conservatives entered into a coalition with the Liberal Democrats. By entering into a pact with UKIP by offering an in-out EU referendum, we would not only please many possible Conservative voters and pre-empt any Labour initiative in that direction, we would prevent the crucial seepage of Conservative votes to UKIP in key marginal seats.'
If Mr Farage brokered a deal, Mr Cameron should offer him a job in Government because he was such a good communicator, said Mr Fabricant. He warned that the alternative to a pact 'which both David Cameron and UKIP will have to consider, might mean a more pro-European Union Labour Government'.
At the 2010 General Election, UKIP won 3.1 per cent of the popular vote, but cost the Tories dozens of marginal seats.
Mr Cameron is under pressure to take a more Eurosceptic stance, with growing numbers of Tory MPs demanding a straightforward referendum on whether Britain should remain a member of the EU.
The PM has said he will only hold a vote on rubber-stamping a new relationship with Brussels, but does not want to leave altogether - a position backed by Boris Johnson yesterday.
Mr Johnson dismissed calls for a referendum on Britain’s membership of the EU.
He said: 'Suppose Britain voted tomorrow to come out, what would happen in real terms? We’d still have huge numbers of staff trying to monitor what was going on in the community, only we wouldn’t be able to sit in the Council of Ministers – we wouldn’t have any vote at all.
'I don’t think that’s a prospect that’s likely to appeal. With great respect to the in-outers, I don’t think it does boil down to such a simple question,’ the London mayor told BBC Radio 5Live.
Instead, he called for a repatriation of powers from Brussels: ‘What you could do is think of a new arrangement, areas of the treaty we didn’t want to participate in any more.’
Foreign Secretary William Hague suggested the Government would indeed offer a referendum on UK membership of the EU – after a renegotiation of the relationship and once the eurozone crisis was over.
Tony Blair will warn this week that Britain's prosperity relies on the country remaining committed to a strong EU.