Eurosceptic veteran Iain Duncan Smith, who quit as work and pensions secretary in March, told The Sun newspaper that a key demand for an emergency brake on mass immigration was ditched at the last minute at Berlin's behest.
The prime minister's Downing Street office insisted Cameron had decided against the demand himself.
Cameron sought reforms to the UK's relationship with the European Union before calling the June 23 in-or-out referendum on Britain's membership of the bloc.
Duncan Smith, a former Conservative Party leader, said the migration brake call was to have been in a speech by Cameron on November 27.
“I saw the draft. I know that right up until the midnight hour, there was a strong line in there about restricting the flow of migrants from the EU – an emergency brake on overall migration,” he said.
“It was dropped, literally the night before. And it was dropped because the Germans said, 'if that is in the speech, we will have to attack it'.”
He said Berlin “had a de facto veto over everything”.
The referendum campaign has kicked into full swing following Thursday's regional and local elections in Britain.
On Monday, Cameron, who wants Britain to stay in a reformed EU, said that a British exit from the 28-country bloc would threaten peace on the continent.
Conservative former London mayor Boris Johnson dismissed the claims and said Brexit was now the “great project of European liberalism”.
Duncan Smith's intervention was likely only to worsen the Conservative rift over the EU. Only around half of the party's MPs have joined Cameron in the “Remain” camp.
The “Remain” and “Leave” campaigns are locked on 50 percent each, according to the What UK Thinks website's average of the last six opinion polls.
Instead of being able to impose an emergency brake on immigration, Cameron won a concession to control access to in-work welfare for new EU immigrants for four years.
A Downing Street source told The Sun: “The prime minister made clear at the time that the government had looked at an emergency brake but he decided it was not the most effective way forward.
“That is why he decided to impose restrictions on benefits instead to end the something-for-nothing culture.”