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Business Secretary Vince Cable has insisted a cap on European Union migrants is "not going to happen" and accused the Tories of being in a panic over immigration.
Referring to previous periods of heightened tensions, including Enoch Powell's "rivers of blood" speech, he warned politicians they had a responsibility to "give the facts" and not "resort" to populism.
It comes after party leader Nick Clegg pledged to block fresh attempts to curb EU immigration, insisting "this is where we draw the line".
Mr Cable yesterday told BBC1's Andrew Marr Show: "We periodically get these immigration panics in the UK. I remember going back to Enoch Powell and rivers of blood and all that. If you go back a century it was panics over Jewish immigrants coming from Eastern Europe.
"The responsibility of politicians in this situation when people are getting anxious is to try to reassure them and give the facts, not panic and resort to populist measures."
He added: "The 75,000 cap is illegal and impossible to implement in any event. I think what's happening here, the Conservatives are in a bit of a panic because of Ukip reacting in the way they are. "It's not going to help them, I think, politically, but it's doing a great deal of damage. The responsibility of politicians in this situation is to look at the facts and the simple point is that there's very little evidence of benefit tourism for people coming from Eastern Europe.
"All the evidence suggests they put far more into the economy in terms of tax than they take out in benefits."
Asked if there was a crisis in the Coalition on the issue, he said: "There is quite a lot of tension around this issue."
Mr Cable was also critical of the Home Office clampdown on student visas, warning it harmed international business. He said: "I'm in my department dealing with some of the negative effects of discouraging overseas students, all the visa restrictions which have now become so ridiculously tight we can't get people coming in from China and India to do business."
Earlier this week, Prime Minister David Cameron warned he would veto further expansion of EU borders unless reforms were agreed to crack down on "benefit tourism". A ban on EU migrants claiming out-of-work benefits from the moment they arrive in the UK is also being rushed through Parliament to be in place in time for the January 1 lifting of access restrictions on Bulgarian and Romanian nationals. As tensions heighten over a possible "influx" of Bulgarian and Romanians from next month, Bulgaria's president criticised the fear tactics being used by some politicians and warned that Britain could appear isolationist.
Rosen Plevneliev told the Observer: "The only thing that is important is not to listen to populist politicians who play on people's fears but to listen to the wise men in Great Britain.
"Listen to the institutions who are giving the facts. University College London has very clear data showing that in the past 20 years immigrants contributed 34 per cent more than they took out. You guys are making profit out of this." Reported by This is 2 hours ago.