Baroness Warsi was a Brexit supporter but says she was turned off by what she described as the spreading of "hate and xenophobia".
A leading Conservative has defected to the Remain camp, citing Nigel Farage's controversial anti-migrant poster as the final straw.
Baroness Warsi, a former Foreign Office minister, had been a Brexit supporter but said that she had been turned off by what she described as their spreading of "hate and xenophobia".
The UKIP poster that she said was the final straw showed non-white migrants queuing to get into Europe under the slogan "Breaking Point".
She said: "That 'breaking point' poster really was, for me, the breaking point to say: 'I can't go on supporting this'.
"Are we prepared to tell lies, to spread hate and xenophobia just to win a campaign? For me, that's a step too far."
But Bernard Jenkin, a senior figure in the Leave camp, tweeted that he had not seen Baroness Warsi at a single meeting - suggesting she was not part of the campaign.
She is not the first politician to criticise the poster - Scotland's First Minister Nicola Sturgeon described it as "vile and racist", while Chancellor George Osborne said it was "disgusting" and having "echoes of literature used in the 1930s".
Campaigners on the Leave side were equally as scathing, with Justice Secretary Michael Gove saying he "shuddered" when he saw the poster and Chris Grayling calling it "wrong".
UKIP leader Mr Farage defended the poster, however, telling Sky News that it "reflects the truth" about migration and the European Union.
Mr Farage told Sky's Dermot Murnaghan that the poster - which has been reported to police for alleged racism - would not be appearing again as it was the first in a series of five planned for the referendum campaign's final days.
He said the campaign would not have attracted so much attention had it not been for the murder of Labour MP Jo Cox hours after the poster was launched last Thursday.
He said: "That poster reflects the truth of what's going on. There's a new poster coming out tomorrow morning.
"I wish an innocent member of Parliament had not been gunned down in the street and frankly, had that not happened, I don't think we'd have had the kind of row we have had."
Mr Farage risked a row with his fellow Leave campaigners as he responded to criticism from Mr Gove.
He said: "Michael Gove better take a look at his own posters - pictures of Abu Hamza, warnings about terrorists and murderers coming into Britain at free will."
Meanwhile, Leave campaigner Boris Johnson spoke to Sky News after a video emerged in which he said he would vote to remain in the single market.
The former London mayor said he made the remarks in 2013 after the Prime Minister had promised "we would have fundamental and far-reaching reform" of the European Union.
Remain-supporting Labour leader Jeremy Corbyn also told the BBC's Andrew Marr that limiting immigration would be impossible under EU rules.
Asked if an upper limit could be put on the numbers of EU immigrants to the UK, he said: "I don’t think you can have one while you have free movement of labour.
"The very principle of a single market across Europe is the free movement of people."
David Cameron appeared before a BBC Question Time audience in Milton Keynes and was slammed by one audience member who likened him to a "21st century Neville Chamberlain waving a piece of paper in the air saying to the public, 'I have this promise"' - a reference to the appeasement of Hitler in the 1930s.
Billionaire entrepreneur Sir Richard Branson has warned that leaving the EU would be "devastating" for the UK's long-term prosperity, writing in an open letter: "As an entrepreneur I have been known for taking risks throughout my career but leaving the European Union is not one of the risks I would want the UK to take - not as an investor, not as a father and not as a grandfather.
"I am deeply concerned about the impact of leaving."
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