Furious Tory backbenchers were preparing to challenge the Government over the £9.3 million plan to deliver pro-EU leaflets ahead of the referendum as David Cameron issued a fresh warning about the security risk posed by Brexit.
Eurosceptic Conservatives have threatened to derail George Osborne's Budget in protest at the controversial taxpayer-funded leaflets, which will set out why the Government is supporting a Remain vote on June 23.
More than 200,000 people have signed a petition demanding that the Government abandons the plan and Europe Minister David Lidington will be forced to defend the controversial move when he makes a statement in Parliament on Monday.
Veteran Tory Eurosceptic Sir Bill Cash said he will table an amendment to the Finance Bill, which enacts the Budget, which could block its progress if passed in a Commons vote.
Sir Bill, chairman of the Commons European Scrutiny Committee, said: "I am putting down a very big indicator of the anger and, I would go so far as to say, the fury of people who are being asked to pay - and there are millions of them in the country - for a pamphlet to 27 million homes."
He added: "You don't have to reinvent the wheel to discover that people really do resent being expected to pay for propaganda as a taxpayer."
Sir Bill accused ministers of "breaking the principle of fairness" over the conduct of the referendum.
As ministers prepared for a fresh round of conflict within the Tory party, Mr Cameron warned that the UK's security was at risk if the country voted to leave the EU at a time when "Western values" were under threat.
He also forecast an "economic shock" if the country voted Leave and accused Brexit campaigners of "gambling with our country's fortunes".
Writing in the i newspaper, Mr Cameron said: "Membership gives us security because it helps keep us safer. Why? Because we can work with our neighbours more effectively to share information on criminals and terrorist threats.
"And it makes Britain stronger, giving us strength in numbers, working with our partners to promote our values - standing up to extremism, supporting democracy and promoting free enterprise. Leave, and we relegate Britain to the sidelines while our neighbours take the big decisions about our continent."
He added: "At a time when the global economy is so volatile, we should do whatever gives our people the most financial stability. The world is increasingly divided, so it's vital we choose unity. Western values are under threat - we must stand with those who share them.
"And times are tough for young people. We must do everything we can to knock down the barriers to opportunity."
Mr Cameron insisted he was making the "pragmatic, patriotic, passionate" case for Remain as he warned against a vote to "turn our back on a key international relationship".
His comments come after Brexit-backing Defence Minister Penny Mordaunt warned that staying in the European Union would be a "gamble" with the nation's security.
She claimed EU free movement rules mean the UK cannot turn away suspected Islamic State terrorists if there is no "concrete intelligence" about them.
The Armed Forces Minister said Europol estimates around 5,000 IS-trained fighters have returned to Europe.
She told BBC One's Sunday Politics: "Currently, unless we have concrete intelligence, we may have suspicions about an individual coming to our shores, we can't turn them back if they have an EU passport."
Ms Mordaunt added: "We risk nothing by taking back control of our borders and our laws that underpin this framework.
"It's not a gamble. Staying in is a gamble, because this is only going to get worse. We have to take back control. That is what is required to keep our nation safe."