Conservatives who are unhappy with the party line on European Union membership should throw in their lot with the avowedly anti-EU UK Independence Party, its leader Nigel Farage said on Friday.

Farage dismissed Prime Minister David Cameron's claim to be a eurosceptic, calling him the most pro-Europe Conservative leader since Edward Heath who led Britain into the then Common Market in 1973.

The reality is the rebels lost last week. The anti-EU cause within the Conservative party under this leadership is dead, Farage told Reuters in an interview.

My argument to those MPs is 'if this is how you feel...you better come and join us because you are wasting your time where you are,' he added.

Around 80 Conservative MPs defied Cameron last week and backed a call for a referendum on EU membership.

Cameron would like to claw back powers from the EU, but says the priority is to resolve the financial crisis that is raging through the single currency zone at the heart of the EU.

Ironically, for an anti-EU party, UKIP had its best ever result at the 2009 European election when it won more than 16 percent of the vote, beating then ruling Labour into third place.

Farage said the party had drawn support not only from disaffected Conservatives, but also in traditional Labour strongholds in northeast England.

He sees plenty of scope for the party to build on this base now Europe has risen back up the political agenda.

Across the country, we are in conversations with a lot of district councillors, county councillors: people who are making up their minds and saying is it time now for us to jump ship?

Farage, a member of the European parliament, broke a number of bones in an accident on general election day last year when a plane carrying a UKIP banner crashed into a field. He says that he still suffers back pain from the accident and notices how a short walk now can tire him out.

TRADE ARGUMENT

Not surprisingly, Cameron's claims that withdrawal from the EU would be a disaster for British business cut little ice with the dapper Farage, a 47-year-old former commodities trader.

He (Cameron) is stuck with this same dreary line that (Tony) Blair and (Gordon) Brown and all of them pumped out. That unless you are a member of a political union, you can't do business with Europe, he said.

Farage argues that any threat of reducing trade would be counter-productive to Britain's continental neighbours.

Trade isn't done by governments. The idea is that there will be some sort of trade retaliation, well they would be stuffing themselves, so that wouldn't happen, he said, puffing on a cigarette in an interview over coffee outside a Westminster pub.

He envisages Britain remaining part of the European Economic Area, like Norway, and enjoying a strong working relationship with the rest of Europe while being freed of what he regards as burdensome regulation and an undemocratic structure.

Farage, married to a German, says he is fearful for the future of Europe, with the optimism brought on by the fall of the Berlin Wall 20 years ago giving way to something much darker.

I see Europe now as being split - when we were all growing up it was east-west, now it's north-south, he said.

There is a democratic revolution going on in some of the northern European countries, starting with Finland, and the prospects of civil unrest in some of the Mediterranean countries.

Farage provoked outrage in the European parliament last year when he attacked EU President Herman Van Rompuy as having the charisma of a damp rag and saying the Belgian came from a non-country.

For once, he takes on a slightly sheepish air when asked whether he regretted the episode.

I'm an unscripted speaker. Sometimes you might get the pitch a little wrong, he said.

My intention was to have some fun but I think it looked a little bit too personal.

(Editing by Steve Addison)