One of David Cameron’s closest political allies has accused the Prime Minister of putting money into “one-sided propaganda” rather than the NHS as the row over the Government’s pro-EU leaflet intensified.

Mr Cameron insisted he was right to sign off on a £9m Government-produced leaflet that is being sent to every household in the country setting out the case for voting to remain in the EU. He claimed it was “money well spent” because people needed to “know what the Government thinks” ahead of the referendum.

The cost of the promotional push is greater than the £7m each the formal Leave and Remain camps will be allowed to spend by law during the last 10 weeks of the campaign.

In an attack on the Prime Minister, Michael Gove – previously one of his closest political supporters and a personal friend – questioned his motives.

“I want a fair campaign, I want to hear from both sides,” he told the BBC.

“I just think it is wrong that at a time of austerity, £9m of taxpayers' money is being spent on a one-sided piece of propaganda.

”That money should be being spent on the NHS and the people's priorities, not on propaganda.“

Mr Gove’s attack underlines how hard the pro and anti-EU wings of the Tory party are finding it to campaign against each other without doing lasting damage to their relationships.

Addressing young voters at a rally in Devon, Mr Cameron denied spending taxpayer money on the leaflet was ”undemocratic“.

”We are not neutral in this,” he said.

“We think it would be a bad decision to leave. We think it would be bad for our economy, bad for jobs, bad for investment, bad for families' finances.

“We think it would be bad for universities. We are not neutral so we have made a clear stance in this leaflet which everyone will get a copy of.”

He went on: “There is nothing to stop the Government from setting out its view in advance of the campaign and that's what the Government did in 1975, when we last had a referendum.

”I want everyone in the country to know just how strongly the Government, that works on your behalf - you might not agree with everything it does but it works on your behalf - feel that the right choice is to stay in.

“That is why we are spending this money.

”I want everyone to have all the information at their fingertips but I absolutely make no apology for the fact that the Government has a strong view and wants everyone to know that strong view.“

Ukip’s leader Nigel Farage questioned whether the referendum was now still ”free and fair“.

Speaking at the launch of Ukip's Holyrood election manifesto in Edinburgh, he said: ”I know that this was a stunt that Harold Wilson pulled back in 1975 but I would have thought one of the very reasons for the establishment of an Electoral Commission was that the ground rules in this referendum were supposed to be free and fair.

“Given that HM Government is not a registered participant in this campaign, I think, frankly, it's outrageous to use £10 million of our money to tell us how we should think and how we should vote.”

Former defence secretary and Tory MP Liam Fox, a Vote Leave campaigner, said the Government is exploiting a “loophole” in election campaign rules.

He told BBC Radio 4's World At One: “It's a question of fairness. The Government knows that it wouldn't be allowed to put this leaflet out during the last four weeks of the campaign and is taking advantage of that loophole.

"What the Government are effectively doing is doubling the funding for one side, ie the Remain campaign, by spending this amount of money."

He added that the public wanted balanced information: ”I think they would like to see both sides of the argument and what they're getting is a lot of opinion and it is in fact propaganda.

“If it's not against the letter of the law, it's certainly against the spirit of the referendum in giving the public a balanced view of the information.”

But he distanced himself from accusations that the Government timed the leaflet's launch to divert attention away from the scrutiny of Mr Cameron's tax affairs.

He said: “I think the Government has been doing this for some time ... I'm sure the Government thought this was the window in which they would get away with it.