Conservative Party co-chairman Lord Feldman has denied calling grassroots activists "mad, swivel-eyed loons".
He is taking legal advice over internet rumours that he was responsible for remarks reported in the press, he said.
Members have reacted angrily to claims a figure close to the PM used the term in blaming the grassroots for pressing MPs to amend the Queen's Speech.
More than 100 voted to express "regret" at the lack of an EU referendum bill. Downing Street has refused to comment.
The comments were allegedly made at a private dinner by someone with "strong social connections" to the prime minister,The Times, Mirror and Daily Telegraphnewspapers reported.
"There's really no problem," the unnamed person is reported to have said, referring to the Conservatives who voted to amend the Queen's Speech over Europe.
"The MPs just have to do it because the associations tell them to, and the associations are all mad swivel-eyed loons."
Conservative associations are the constituency campaign groups made up of local party members.
In a statement, Lord Feldman, a friend of David Cameron's from Oxford University, said: "There is speculation on the internet and on Twitter that the senior Conservative Party figure claimed to have made derogatory comments by the Times and the Telegraph is me.
"This is completely untrue. I would like to make it quite clear that I did not, nor have ever described our associations in this way or in any similar manner. I am taking legal advice."
Bob Woollard, chair of umbrella group Conservative Grassroots, told the BBC it was "absolute madness to criticise your own troops".
"These comments are so arrogant and pompous as to be unbelievable," he said, adding that Mr Cameron should publicly distance himself from them.
Mr Woollard, the former chair of Wycombe Conservative Association, said he had "a lot of sympathy with what Nigel Farage said when UKIP were criticised similarly".
In 2006, Mr Cameron described the UK Independence Party as "sort of a bunch of... fruit cakes and loonies and closet racists mostly".
Reacting to the latest reports, Mr Faragetweeted: "If you are a Conservative supporter who believes in UKIP ideas then your party hates you. Come and join us."
Mr Cameron has said he wants the UK to stay in the EU but wants to change Britain's relationship with it, taking back some powers from Brussels.
However, 116 Conservative backbenchers supported this week's amendment to the Queen's Speech expressing regret over the lack of firm plans for a referendum. Although the motion was defeated, opponents called it a blow to the prime minister's authority.
'Self-indulgence'
In the wake of the vote, Mr Cameron then said his party would give full support to a private member's bill from Eurosceptic backbencher James Wharton outlining the terms of a referendum to be held by 2017.
The bill is likely to be opposed by Labour and the Liberal Democrats, who have accused their Tory coalition partners of "self-indulgence" and say the row could deter businesses from investing in the UK.
Speaking to BBC Radio 5 live on Saturday morning, Mr Wharton described the comments as the result of a "lapse of judgement", saying they were "offensive and foolish".
"It's such a shallow and inaccurate assessment of what's going on," he said, adding that it did not reflect the reasons behind MPs' decisions to back the amendment.
Several Conservative MPs have spoken out in praise of constituency activists. Among them was Neil Carmichael, who told 5 live the reported comments "may well have been taken completely out of context".
Another Tory MP Tracey Crouch tweeted: "I wonder if this 'aide' has ever been a member of an association, delivered a single leaflet, packed an envelope or knocked on a door?"
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