He warned the eurozone “cannot long put off” the decision over whether to bring stability to Greece and other weak economies or allow them to leave the euro.
His remarks came during a fraught Prime Minister’s Questions, in which Ed Miliband, the Labour leader, suggested the Prime Minister should take “anger management” lessons before he appears at the Leveson Inquiry into press standards.
Ed Balls, the Shadow Chancellor, also repeated his weekly exhortation to the Prime Minister to “calm down” at which Mr Cameron lowered his voice and insisted: “I’m extremely calm”.
Mr Cameron’s eurozone comments were being seen as the Government’s bluntest assessment over the prospects for the single currency since the debt crisis began.
His aides stressed that he had cleared his position with the Chancellor, George Osborne, who warned just two days ago that “open speculation” about the future of some eurozone members was damaging the European economy.
Speaking during PMQs, Mr Cameron said: “The eurozone has to make a choice.
“If the eurozone wants to continue as it is, then it has got to build a proper fire wall, it’s got to take steps to secure the weakestmembers of the eurozone, or it’s going to have to work out it has to go in a different direction.
“It either has to make up or it is looking at a potential break up. That is the choice they have to make and it is a choice they cannot long put off.”
Downing Street sources insisted Mr Cameron’s message to European leaders was consistent with his previous warnings on the crisis. But it was the first time that the Prime Minister had explicitly told the eurozone it faces imminent “break up”.
“He would obviously rather it was ‘make up,’” a source close to Mr Cameron said. “There would be huge implications for us if it was the ‘break-up’ option.”
The government would also prefer Greece to remain in the euro, if the Greek people and other eurozone members agree, a Downing Street source added.
Aides stressed there were no provisions in European law to allow for one country to leave the euro.
Mr Cameron and Mr Osborne have blamed Britain’s slow growth on the deepening crisis in the eurozone.
Mr Cameron’s comments are expected to be echoed in a high-profile speech on the economy tomorrow.
The Governor of the Bank of England also declared today that the eurozone was “tearing itself apart”, warning that Britain would not escape from the fall-out.
Sir Mervyn King announced that the Bank had cut its growth forecasts for the year from 1.2 per cent to 0.8 per cent.
Sir Mervyn said contingency plans were being drawn up to protect the UK from the possible impact of euro break-up.
However, he warned of the “risk of a storm heading our way from the continent” as he identified the crisis in the single currency as the greatest threat to recovery in Britain.
Greece is due to hold fresh elections after political parties failed to agree a new government amid widespread public anger at austerity measures imposed in exchange for international bail-out funding.
Stock markets across Europe were unsettled by the uncertainty over whether any new administration in Athens will be able to honour the national austerity policy agreed as part of multibillion-pound EU-IMF packages to keep Greece afloat.
The euro dipped below 1.27 US dollars to a four-month low today over fears of a Greek exit from the single currency, while bond yields in Italy and Spain hit new highs, reflecting market concerns about the possibility of peripheral countries being forced out of the euro.