Ukip candidates will be permitted to run in joint tickets alongside Conservative MPs, Nigel Farage has suggested.
The Ukip leader praised the "innovative thinking" of right-wing Tory backbenchers like Peter Bone and Jacob Rees-Mogg who had proposed the idea, as the Tories continue their autumn conference in Manchester.
Farage has given the green light for local Ukip associations to choose whether their candidate should run on a joint platform with another party.
"If after discussions they feel that it would be a better way to serve their constituents, then I and the national executive committee would be happy to hear reasoning," he wrote.
"After all, we are a party that believes in real localism and doesn't think that the centre is the repository of all wisdom.
"But I suspect that Conservative Central Office would crush such innovative thinking."
Chancellor George Osborne confirmed that fear this morning, saying on the Today programme: "There aren't going to be any deals with Ukip, and there are not going to be Conservative-Ukip candidates locally."
Farage complained that David Cameron "despises us" and that "to the Tory high command I am a plague carrier". He is visiting Manchester this week but has not been awarded a pass to the Tory conference.
His party poses a serious threat to the Tories at the next general election which is likely to undermine Cameron's already slim chances of achieving an overall majority in 2015.
Some grassroots Tories are deeply concerned after Ukip averaged 26% in council wards where it stood in the 2013 local elections.
It is now preparing for its 2014 European elections campaign which it is expected by many - including Farage - to win outright.
"This in itself could possibly, though still improbably, create a situation where the powers at the EU top table may be minded to offer the concessions on which Mr Cameron has staked his reputation," Farage suggested.
"For the first time, a big Ukip vote could finally convince them that the people of Britain could well vote to leave, which they do not want to happen. So a big Ukip vote could help Mr Cameron with his negotiations."
The Tory leadership's authority could come under threat in areas where eurosceptics fear the Tories and Ukip could split the vote.
Such a move could contribute to a Conservative failure at the next general election - meaning voters lose the opportunity of the in-out referendum promised by Cameron for 2017.