Tories face a backlash after an online ad hailed bingo and beer tax cuts as "helping hardworking people do more of the things they enjoy".
The Scottish Parliament could gain more power over tax if voters reject independence, David Cameron has suggested.
MP Peter Bone insists he is "totally innocent" of allegations of benefit fraud, after his home was raided by police.
Ukip leader Nigel Farage said a by-election win for his party in Clacton would signal a "landslide in British politics".
The Conservative Party is set for a humiliating defeat to Douglas Carswell - who resigned from the Tories - according to an opinion poll in the Mail on Sunday, which gave Ukip a massive 44 point lead.
Mr Farage predicted a Ukip win would result in "more and more people coming over to us" and predicted the party could hold the balance of power after the next General Election.
– Nigel Farage speaking to the Sun on Sunday
This is the moment. If we win the by-election in Clacton, it will create a landslide in British politics. If we lose, then selling ourselves as a party that can win a significant number of seats will get a lot harder.
He added: "If Douglas wins this by-election, then there will be more and more people coming over to us. We could end up holding the balance of power by next May."
Ukip look set to win the Clacton by-election convincingly, according to a new poll.
The by-election follows the decision by MP Douglas Carswell to defect from the Conservatives to Nigel Farage's party.
The Survation poll for the Mail on Sunday has Ukip on 64%, way ahead of the Tories on 20%, with Labour on 13% and the Lib Dems on just 2%.
Mr Carswell's personal appeal has helped the Ukip cause, with one in three respondents (34%) saying they would vote Ukip because they like him.
The family of former Conservative minister Sir David Mitchell, who died aged 86 following a long illness, have paid tribute to the health professionals who looked after him.
– A family spokesman
Sir David Mitchell, the former Member of Parliament for Hampshire North West and minister in the Thatcher governments has died today aged 86.
The family has expressed its gratitude to the health professionals and carers who enabled him to die peacefully in his own home.
Former Conservative minister Sir David Mitchell has died aged 86 following a long illness, his family has announced.
Sir David, who served under Margaret Thatcher in various departments including industry, transport and Northern Ireland, was the father of former Cabinet minister and current Tory MP Andrew Mitchell.
He was an MP from 1964 to 1997, representing Hampshire North West, and died at his home in Odiham, Hampshire, in the early hours of this morning.
Roger Lord, who had been the Ukip general election candidate for Clacton until Douglas Carswell jumped ship yesterday, has called the Tory defector an "idiot".
"If somebody pushes me, I'm going to push back," he said. "Has he [Carswell] got a membership card? I'm not sure he's officially a member yet."
Mr Lord told ITV News Political Correspondent Libby Wiener that Mr Carswell "could have said sorry, but he hasn't got the guts to do it".
Douglas Carswell has denied suggestions he stabbed David Cameron in the back by defecting to Ukip.
He told ITV News' Libby Wiener he had nothing against "nice guy" David Cameron, but had to leave the Conservatives because the Prime Minister was "not serious about change".
He questioned what the difference would be if Ed Miliband's "gang replaced the current gang" in Number 10.
George Osborne has labelled the defection of Douglas Carswell to Ukip as "regrettable and counter-productive".
Speaking in Brighton today, the Chancellor said that the best way to secure a referendum on Britain's membership of the European Union was to have a Conservative government after the next election.
"That's the choice people are going to face, whether it's at the by-election in Clacton or at the general election next year," Mr Osborne said.
Nigel Farage, the Ukip leader, and the party's new candidate for Clacton have been campaigning on the streets of the seaside town this morning.
Douglas Carswell will contest the seat for the eurosceptic party after defecting from the Conservatives yesterday, triggering a by-election for the constituency.
Nigel Farage has reiterated more Conservative and Labour MPs are set to defect to Ukip following Douglas Carswell shock move from the Tories.
While on the campaign trail with Mr Carswell in Clacton this morning, Mr Farage said he expected more to jump ship if the Tory defector wins the by-election.
Mr Farage said, "Let's see what happens in this by-election, but if Douglas wins this by-election there'll be others - not just in the Conservatives but on the Labour backbenches too".
Conservative grandee John Redwood has dismissed the "so-called" eight Tory MPs allegedly considering defection to Ukip as "figments of Ukip's imagination".
"Dream on Ukip," the eurosceptic MP for Wokingham and former Wales Secretary told Radio 4's Today programme.
"I treasure the words of Mr Carswell which he was speaking yesterday. He said that we need to deliver an in-out referendum, he said it would only happen if David Cameron was prime minister," Mr Redwood said.
"He said we must do nothing to make the prospect of a referendum less likely. He was super-loyal until yesterday."