Conservative MPs should "bite the bullet" and get rid of Iain Duncan Smith, his former director of strategy has urged.
Calls are mounting for a leadership challenge
Dominic Cummings, who quit Tory central office in September 2002, says he does not believe Mr Duncan Smith is up to the job as leader.
Mr Cummings said he believed senior Conservative David Davis, who shadows the deputy prime minister, would be a better bet than Mr Duncan Smith.
And Tory donor Sir Michael Bishop, executive chairman of airline BMI, warned there was "no money of any substance" coming in to the Tory party to fund the next general election or the running of its operation.
He said restraint on donations would continue "until this matter is sorted out".
The cautions were given as Mr Duncan Smith vowed he would not step down even if a vote of confidence was called by MPs in his party.
But Mr Cummings insisted: "Anything would be better than the current situation."
He claimed the shadow cabinet knew Mr Duncan Smith was not up to the job of leader.
"It's time they stopped hiding behind the press and hiding behind each other and got on with it," he told BBC Radio 4's Broadcasting House.
"Have a leadership campaign, then try and put the casual reputation of vandalism, which has characterised the party over the last 10 years, behind them."
Mr Cummings said it was "inconceivable" Mr Duncan Smith would call a confidence vote himself.
"I don't think his grip on reality is sufficient that he'll realise he has to go until 25 names put themselves forward and write their letters.
"So I think the MPs have got to bite the bullet and face reality."
Mr Cummings suggested there were "dreadful personal relations" between the Tory leader and David Davies, whom Mr Duncan Smith sacked as party chairman during his summer holiday in 2002.
But asked about Mr Davis as a potential leadership contender, Mr Cummings said: "I think David would be better than the current situation.
"I think there are other people who also will be candidates."
Mr Cummings claimed the party was riven by "constant turf wars over trivia", and accused the Tory leader and other senior party figures of being resistant to radical reforms.
Mr Cummings said he believed the prime minister was a serious adversary determined to destroy the Tories.
Sir Michael Bishop, speaking in a private capacity, warned the Tories could be faced with financial problems if they do not sort out their current woes.
He told Sky's Sunday With Adam Boulton programme: "The
Conservative Party has been really staring into the abyss not just in the last few weeks but for six years since the 1997 general election.
"There are many active supporters in the party who want to see a hugely improved quality of opposition."
Sir Michael argued "some real clarity" was needed after "a very disappointing party conference".
"If we have a vote of confidence in the leader,
everyone must accept the outcome of that and be a united party by whatever that outcome is," he added.