Nick Clegg has said he is "bitterly disappointed" by David Cameron's decision to wield Britain's veto at the EU summit last week, as a significant rift opened in the coalition government.
The deputy prime minister said he feared the UK would now be isolated from key decisions made within the European Union.
"I'm bitterly disappointed by the outcome of last week's summit, precisely because I think now there is a danger that the UK will be isolated and marginalised within the European Union," he said.
"I don't think that's good for jobs, in the City or elsewhere, I don't think it's good for growth or for families up and down the country.
"There's nothing bulldog about Britain hovering somewhere in the mid Atlantic, not standing tall in Europe, not being taken seriously in Washington."
David Cameron has said his decision to block changes to an EU treaty was "the right thing for Britain" as it "didn't have sufficient safeguards for Britain".
Clegg had initially stood by the prime minister and insisted that the "coalition government was united" on the issue. However the europhile Lib Dem leader later said that those "rubbing their hands in glee" at the outcome of the summit should be careful what they wished for.
And a party source later told the Independent on Sunday that Clegg "couldn't believe it" when, on Friday morning, he was informed of the course of events.
Speaking on the BBC's Andrew Marr programme this morning, Clegg said eurosceptics jumping with joy at outcome of the summit were "spectacularly misguided".
"I've always believed in a self confident, open, engaged Britain it's what I believe in and it's what my party believes in," he said.
While Lib Dems are dismayed, many Tory backbenchers are delighted. John Redwood said it was about time a British prime minister said “No” to Europe.
"The EU has got used to dealing with weak previous governments under Blair and Brown, who always were willing in the end to rub out a red line or allow a UK national interest to be damaged in the interests of a deal," he said.
A poll conducted by the Mail on Sunday suggested a majority of voters back Cameron's use of Britain's veto at the European Council. And several Tory MPs will see the dramatic events in Brussels on Thursday night as an opportunity to push Britain towards a referendum on whether to stay in the EU at all.
Labour have jumped on the division between the Lib Dems and the Conservatives. "Nick Clegg now agrees with Labour's argument on every front," shadow foreign secretary Douglas Alexander said.
"That the Prime Minister's policy is damaging for Britain.That Britain's isolation will do nothing to protect the City. And that the reason we have ended up here is that the prime minister put his Party interest before the national interest."
Cameron will face MPs on Monday when he delivers a statement to the Commons. Sat next to him will be Clegg, perhaps somewhat awkwardly.