David Cameron considers a referendum on Europe

The prime minister is considering making a major speech about Britain's future relationship with Europe before December's EU leaders summit.

The speech would set out his vision of how the UK will respond to the recent call from the European Commission President, Jose Manuel Barroso, for a new EU Treaty creating "a democratic federation of nation states".

Mr Cameron has decided not to use his party conference speech to respond to mounting pressure within his party for a tougher stance towards the EU and an in/out referendum.

In the weeks which follow the conference he is due to face a series of awkward votes on Europe in the Commons - including one on Banking Union - which are likely to produce significant backbench revolts. His biggest ever backbench revolt - after Lords reform - was a year ago when 81 Tories rebelled against the party line to vote for a referendum.

Debate continues amongst the prime minister's advisers about whether the Conservatives should promise before the next election to hold an EU referendum and, if so, what the question should be and when it should be held.

A referendum could be used to give the government a mandate to renegotiate its relationship or to back or reject a renegotiation after it took place.

There are problems with both and either would risk morphing into a yes/no verdict on EU membership even if many voters' true views were yes to staying in on new terms.

It mirrors a debate held amongst David Cameron's closest advisers before the last election, after which he concluded that he would promise a referendum on any new EU Treaty, but not on Britain's relationship with Europe.

It is a promise that is producing some unforeseen consequences. Britain might be forced into a referendum on changes that many would argue would scarcely affect Britain at all since we are not members of the eurozone.

The pressures on the prime minister are now much greater than they were before the 2010 election - UKIP is building support and many Westminster insiders believe they could win the 2014 European Parliament elections; Tory backbenchers are restless and even pro-Europeans like Peter Mandelson are arguing that a referendum is inevitable.

One proposal being suggested by some close to the prime minister is a promise for a referendum on, or before, a fixed date towards the end of the next Parliament - for example in 2019.

The Foreign Secretary William Hague has described Europe as like a ticking timebomb for the Conservative Party. For years he has advised the prime minister that it is best not to try to defuse it but simply hope that it won't go off.

I understand, though, that David Cameron now accepts that he can no longer continue to lecture his party not to obsess about Europe and will have to lead the debate.

The prime ministers' advisers are stressing that a speech on the EU is not yet fixed let alone being drafted. A final decision on whether to hold a referendum may well come after any speech and closer to the election.