David Cameron has signalled he is ready to lead Britain out of the European Union if other EU states set their faces against tough new proposals to cut immigration.

In a much-anticipated speech setting out plans to bar EU migrants from claiming welfare for the first four years after arriving in the UK and deport those who do not find jobs within six months, Mr Cameron warned that he will 'rule nothing out' if other European states turn a deaf ear to British concerns.

The Prime Minister insisted that he still hopes to be able to recommend an In vote in the referendum on EU membership he has promised for 2017, and said he was 'confident' of success in the renegotiation of the terms of that membership he plans if Conservatives win next year's general election.

David Cameron (pictured) has signalled he is ready to lead Britain out of the European Union if other EU states set their faces against tough new proposals to cut immigration

But he left no doubt that he has not ruled out recommending British exit if other EU nations refuse to compromise on the principle of free movement and accept reforms that he said were 'radical' but 'reasonable and fair'.

Welfare changes to cut migration from within the EU 'significantly' will be an 'absolute requirement' in the renegotiation, he said.

Under his plans, EU jobseekers without an offer of employment will not be allowed to claim the new Universal Credit when they arrive in the UK and will be required to leave if they do not find work within six months.

Migrants will be able to claim tax credits and child benefit and to apply for social housing only after four years in the country, and will receive no child benefit or child tax credit for offspring living abroad

'If you elect me as Prime Minister in May, I will negotiate to reform the European Union, and Britain's relationship with it,' said Mr Cameron. 'This issue of free movement will be a key part of that negotiation.

'If I succeed, I will, as I have said, campaign to keep this country in a reformed EU.

'If our concerns fall on deaf ears and we cannot put our relationship with the EU on a better footing, then of course I rule nothing out.

'But I am confident that, with goodwill and understanding, we can and will succeed.'

David Cameron took a swipe at the Ukip, under Nigel Farage (pictured) warning voters to 'distrust those who sell the snake oil of simple solutions'

Speaking in Staffordshire a day after official statistics showed net migration rising to 260,000 over the past year - 16,000 higher than when the coalition Government came to office - Mr Cameron conceded that his policies had 'not been enough' to meet the Conservative target of cutting overall numbers to the tens of thousands by 2015.

But he insisted that his reforms had made 'a real difference', cutting numbers of migrants from outside the EU by as much as 50,000. He promised to 'go further' if he wins next year's election, by revoking the licences of colleges whose students overstay visas, extending 'deport first, appeal later' rules and requiring landlords to check tenants' immigration status.

'The ambition remains the right one. But it's clear: it's going to take more time, more work and more difficult long-term decisions to get there,' said Mr Cameron.

In a clear swipe at the UK Independence Party, which has built support by highlighting public concerns over immigration, the Prime Minister warned voters to 'distrust those who sell the snake oil of simple solutions'.

Denouncing as 'appalling' any suggestion of repatriating legal migrants, Mr Cameron said Britain was great 'because of immigration, not in spite of it', and insisted he was proud of the UK's openness to incomers and its creation of 'a successful multi-racial democracy'.

The isolationism of those who want to 'pull up the drawbridge' and shut off immigration altogether is 'actually deeply unpatriotic', he said.

'For the sake of British jobs, British livelihoods and British opportunities we must fight this dangerous and misguided view that our nation can withdraw from the world and somehow all will be well,' said Mr Cameron.

But he also warned against the 'dangerous' idea that immigration is not a problem and that it is racist to voice anxiety about it.

'We should be clear,' said the Prime Minister. 'It is not wrong to express concern about the scale of people coming into the country.

'People have understandably become frustrated. It boils down to one word: control. People want Government to have control over the numbers of people coming here and the circumstances in which they come, both from around the world and from within the European Union.

'They want control over who has the right to receive benefits and what is expected of them in return. They want to know that foreign criminals can be excluded - or if already here, removed. And they want us to manage carefully the pressures on our schools, our hospitals and our housing.

'If we are to maintain this successful open meritocratic democracy we treasure, we have to maintain faith in Government's ability to control the rate at which people come to this country.

'And yet in recent years, it has become clear that successive governments have lacked control.

'People want grip. I get that. And I completely agree.'