A fiery exchange broke out in the European parliament on Tuesday after MEP Guy Verhofstadt called the Italian prime minister, Giuseppe Conte, “a puppet”.

The slur came after Conte made his debut speech in Strasbourg, during which he said the EU had lost touch with the people since the financial crisis of a decade ago and that its immigration rules were unsustainable.

Verhofstadt, who leads the Alliance of Liberals and Democrats for Europe party, asked Conte how much longer he would be “the puppet” of Italy’s two deputy prime ministers, Matteo Salvini and Luigi Di Maio.

Verhofstadt expressed his regret over Italy having gone from being a staunch supporter of the EU to a “laggard”. Since Italy’s rightwing populist government came to power last June, it has confronted the EU over immigration and its budget for 2019 and launched verbal attacks against France that last week led to the French government recalling its ambassador from Rome.

“It hurts me to see the political degeneration of Italy,” Verhofstadt added.

Conte, who was a little-known law professor before being picked by Salvini and Di Maio to lead their alliance, replied: “We have to be careful about the words we use. I’m not a puppet. I’m very pleased to represent my people.”

Verhofstadt’s remarks provoked a sharp rebuke from Salvini, leader of the far-right League.

“That some European bureaucrats, accomplices to the disaster of these years, dare to insult the Italian premier, government and people is really disgraceful,” he wrote on Twitter.

Conte also came under fire from other European politicians, including Udo Bullman, leader of the European Socialists and Democrats grouping, who said he was “saddened by the senseless escalation between Italy and France”.

Conte confirmed on Wednesday that the French president, Emmanuel Macron, had spoken to the Italian president, Sergio Mattarella, by phone, the first official contact between the two countries since France recalled its ambassador on Thursday. Conte insisted relations were “solid” and could not be blighted by “single episodes”.

Touching on other contentious issues, the MEP Manfred Weber asked Conte why Italy was not supporting “democratic forces in Venezuela” and why the coalition partners had failed to agree on whether to continue work on a long-contested high-speed rail project linking the northern Italian city of Turin with Lyon in France. Salvini’s League supports the project, while Di Maio’s Five Star Movement (M5S) is vehemently opposed.

In what is likely to further harm relations with Paris, a cost-benefit analysis commissioned by the transport ministry, led by an M5S politician, has concluded that the project is a waste of public money and would deliver a negative economic return of €7bn-€8bn.

The €20bn bill is being shared between Italy, France and the EU, which late last year said it was prepared to increase its contribution to 50% of the overall cost.

The French committee for the project, Comité Transalpine Lyon-Turin, criticised the analysis as “extraordinarily biased”. In November, the French transport ministry said Italy must decide by early 2019. But amid the government tussle, Italian media reported on Wednesday that a decision on the project was likely to be postponed until after the EU elections.