David Cameron's "vague" promise of a renegotiation of Britain's membership of the European Union will damage economic growth and distract the Prime Minister's attention from more important issues such as jobs, immigration and crime, Nick Clegg has warned.

The Liberal Democrat Deputy Prime Minister made clear the depth of division between the coalition parties over Europe, saying that Mr Cameron had announced a five-year timetable for the "so-called" renegotiation and an in/out referendum on UK membership "for his own political purposes".

But he indicated that the referendum promise would not necessarily prevent Liberal Democrats entering into a renewed coalition with Conservatives in the case of a hung Parliament after the 2015 general election.

The Prime Minister has been boosted by a letter signed by 56 leaders of industry and the City, who welcomed his renegotiation proposals as "good for business and good for jobs in Britain".

Signatories to the letter to The Times included London Stock Exchange chief executive Xavier Rolet, Standard Chartered chairman Sir John Peace and Diageo chief executive Paul Walsh.

They challenged Mr Clegg's argument that a protracted renegotiation will be bad for business, saying: "We need a new relationship with the EU, backed by democratic mandate."

And supporters of the plan welcomed German chancellor Angela Merkel's comment that she was "prepared to talk about British wishes... (and) find a fair compromise" as a sign that other European powers will be ready to engage with Mr Cameron's proposals for reform of the EU.

But Mr Clegg told LBC 97.3 radio: "I simply don't understand the point of spending years and years and years tying yourself up in knots, so-called renegotiating the terms of British membership in ways which at the moment at least are completely vague."

He added: "The things people worry about are immigration, jobs, crime on their streets. My worry is how are we going to address those concerns, which are the things people care about most, if you are going to spend the next five years touring European capitals coming up with ever more complex ways of renegotiating the status of Britain in the European Union?"

Asked if his differences with Mr Cameron over Europe would block a future Tory-Lib Dem coalition, Mr Clegg replied: "If a coalition is necessary following the votes of the British people, then we will play our part. I will always play a responsible role... to ensure this country has good government in the national interest."