Mutiny threat

David Cameron has pledged to leave Europe's largest political group, and Mr Hague is trying to reach a deal with other parties that share the Tory vision.

Geoff Hoon said Mr Cameron's plan would "totally marginalise the Tories" in Europe.

Some Tory MEPs are threatening to stay in the European People's Party.

UKIP MEP Nigel Farage said: "Hague has failed totally to find a home for the British Conservatives in Europe."

Mr Hague, who led the Conservatives from 1997 until 2001, told BBC News that "sometimes decisions in politics upset people".

He denied the new bloc would mean the Conservatives aligning themselves with extremists, pointing to some of the right of centre parties in the new EU countries, such as the Czech Civic Democrats.

In a speech to the think-tank Open Europe he said rows over tariffs and subsidies for planes and steel had damaged the EU and US economically.

Breaking barriers down

He said he was a firm believer that Britain should play a strong part in the European Union.

But he warned Europe's prosperity "depends on free trade", and that while globalisation creates understandable fears among member states, "protectionists are undermining the EU's prime purpose".

"I have been surprised by the breadth of support across Europe for a transatlantic free trade area," he said.

"It is a logical extension to the single market. If we think that removing barriers to trade within Europe is a good thing - removing the transatlantic barriers would be even better."

He said on current trends the average US citizen will be "twice as a rich as a Frenchman or German in 20 years".

Energy security

"A transatlantic free trade area's benefits are needed. It is an idea whose time has come and should be championed by the government of the United Kingdom," he said.

Mr Hague argued that the EU had "an essential role" in securing energy security and supply.

He stressed that with the "right priorities", the EU "can open up freedom and opportunity for our citizens, a mutual support in the age of globalisation".

But the British Government should recognise the "widely held conviction" of its people that EU integration "has gone far enough".