Former Tory party chairman Lord Tebbit has claimed that Ukip would not be a significant force in British politics if Margaret Thatcher were still the Conservative leader, as an eve-of-conference row blew up between the party and the Thatcherite Bruges Group.

Tebbit, who succeeded Thatcher as the group's president in April, spoke out as it emerged that the Eurosceptic thinktank is involved in a bad- tempered dispute with the party after details of the group's fringe meeting on Monday, at which Ukip leader Nigel Farage will speak, were deleted from the official party conference guide.

The row, which exposes the deep tensions in the party over Europe, is highly embarrassing as the Tories, gathering in Manchester this weekend, honour the former prime minister, who won three elections. Sunday has been designated Thatcher day.

Tebbit told the Observer that there had been "a lot of over-reaction by the party" to the Bruges Group's invitation to Farage. "I can't make out what they are about," he said. "It is not unusual to have people who are not members of the party at a conference. Farage's views on Europe are similar to those of most people in the Bruges Group and there is no reason not to have him at such an event."

Asked what Thatcher would have thought of the party's decision to disown the meeting, he added: "Farage would not have existed if Margaret Thatcher was still leader. It is as simple as that."

The Bruges Group says it paid £250 to place an ad for the event in the guide. It then booked the great hall in Manchester town hall for the meeting, at a cost of £1,500, only to be contacted later by the Tories, who said they were returning the £250 because Farage was persona non grata. The group is now consulting lawyers about a possible breach of contract.

Two other events at which Farage will speak in Manchester on Monday, run by the Freedom Association and the pro-smoking group Forest, were also deleted from the listings for the same reason.

The party performed the sudden about-turn days after a story about Farage's attendance on the conference fringe appeared in the Observer in July.

Robert Oulds, director of the Bruges Group, which was set up in 1989 to promote the idea of a less centralised European community and to commemorate Thatcher's Bruges speech of 1988, in which she warned of a new "European super-state exercising a new dominance from Brussels", said the late prime minister would have behaved differently.

"Lady Thatcher would certainly have taken on all comers rather than treating them like this," he said. "I am concerned that the party may be trying to stifle debate on this subject [Britain's relations with the EU].

"Instead of ignoring the problem of Ukip we have to start to have a debate and to understand each other, and to find out if there is some way in which we can co-operate."

Farage, who endured a disastrous party conference of his own the week before last, said he would use his appearances to appeal to any Tories who are worried about the EU to support Ukip at next May's European elections: "Now is the time for all Conservatives to desert their party, because a vote for Ukip is the only vote to get Britain out of the EU. If they do so it will also greatly stiffen the resolve of David Cameron to negotiate a better deal for the UK and strengthen his hand in talks with other EU leaders."

Simon Richards, director of the Freedom Association, said the Tories had a right to reject requests for advertisements, but their approach made them look afraid of open debate. He added: "The reason I invited Nigel Farage this time was because the numbers at conference are collapsing, particularly of what I call 'real people', so the way to reverse that is to have some real debates."

The Freedom Association, the Bruges Group and Forest all believe the controversy will increase attendance at their meetings. Forest's event with Farage and Mark Littlewood, the director-general of the Institute of Economic Affairs, at 6pm on Monday is entitled "A beer and a fag with Farage".