Coalition differences over renewable energy have sparked another high-level row, with Nick Clegg directly blocking a bid by David Cameron to restrict onshore wind farms.
A senior Liberal Democrat source said the pair clashed yesterday over the proposal to impose a cap on future generation.
The Prime Minister's environmental credentials were now "dead in the water", they declared.
According to the junior coalition party, the move was being pushed hard by Mr Cameron and Chancellor George Osborne.
It would have allowed existing projects - including those not yet started - to go ahead but blocked any more from being agreed.
Mr Clegg argued that the proposals did not allow for the replacement of the 30% of projects with approval that tend to be abandoned without being built.
And he said it would also further damage fragile investor confidence in the renewables market.
Rural wind farms have been a source of coalition tension, with many senior Conservatives staunchly opposed to the turbines, which Lib Dems say are needed to meet environmental objectives.
There have already been cuts to the state subsidies available and moves to give local communities a greater say.
"Nick Clegg was simply not going to allow the Tories to move the goalposts on green energy again," the source said.
"Some sort of crude block towards onshore wind would seriously damage investor confidence in Britain's energy markets. It would be a double whammy - bad for both British business and for the environment.
"The Liberal Democrats believe in a mixed, diverse green energy future. Capping onshore wind production would leave investors questioning our long-term commitment to all renewable energy sources.
"This would be catastrophic for our growing green economy and the hundreds of thousands of British jobs in it."
Mr Cameron's official spokesman declined to comment on private conversations between the Prime Minister and Mr Clegg.
"The Government's policy is that we want local communities to have a greater say in the planning decisions with regard to onshore wind farms which can affect their communities," said the spokesman. "Changes were recently made to strengthen community involvement."
Renewable UK deputy chief executive Maf Smith said: "The Prime Minister should act quickly to quash these dangerous rumours, which will harm investment across the entire energy sector.
"Onshore wind is the cheapest mainstream renewable technology, and will be cheaper than new nuclear.
"Attempts to artificially limit onshore wind's deployment, rather than looking at each application on a case-by-case basis, would be utterly inappropriate - it would end up costing consumers more money and putting our energy security at risk. Rumours like this make the UK look a less secure place to invest."