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Downing Street has denied claims by Business Secretary Vince Cable that the government's interim immigration cap is doing "huge damage" to business.

Mr Cable said firms were considering moving jobs abroad because they could not recruit the staff they needed.

He told the Financial Times he backed plans for a permanent cap from April but wanted it to be more flexible.

No 10 said the cap would be implemented in a way that still allowed the brightest and best to come to Britain.

The prime minister's official spokesman sought to play down any suggestion of a cabinet rift over what is one of the coalition's flagship policies.

Asked whether Mr Cable would be given a dressing-down for his comments, he said the business secretary had "raised the concerns of business and the government was aware of those concerns".

But he added: "I don't think there is evidence it is doing huge damage to the economy."

It was announced that Home Secretary Theresa May would limit the number of non-EU workers allowed into the UK to 24,100 - down around 5% - between now and April 2011.

Mr Cable told the Financial Times that under the current measure, some businesses could not bring in the skilled, professional staff they needed to expand.

He said: "I was talking to people in the City and there were two investment banks that recruit hundreds of people from the non-EU area, Indians and Americans.

"They were allowed only 30-40. They have moved some operations to Hong Kong."

He added that he had a file full of examples of companies considering relocating jobs overseas because they could no longer bring in key staff and that was "very damaging" to British business.

Mr Cable said he did not dissent from the coalition agreement between the Conservatives and Lib Dems which will see a permanent cap on non-EU immigration put in place from April.

But he has campaigned for the cap to be applied flexibly so it can move up or down according to economic circumstances.

The cap on non-EU immigration was a Conservative Party manifesto commitment but was opposed by the Liberal Democrats before the coalition government was formed.

The temporary limit was announced shortly after the government took office and consultation continues on a final figure for the cap, which may be announced by the end of the year.

´óÏó´«Ã½ political correspondent Iain Watson said Mr Cable was putting down a strong marker that he does not want the eventual limit on immigration to be set at too low a level.

By speaking out ahead of the Liberal Democrat conference, he was likely to offer some comfort to those in his party who have been worried that Lib Dem ministers have not been doing enough to differentiate themselves from their Conservative colleagues.

The Conservative mayor of London, Boris Johnson, has also raised concerns about the immigration cap.

He told the ´óÏó´«Ã½ that London's economy depended on "talent being able to migrate in" and said accountancy firms, banks and law firms "actually find it very, very difficult at the moment to get in some of the people who you really need to keep London's economy going".

Shadow business secretary Pat McFadden said Mr Cable was "right to be resisting the proposal for an annual cap within government".

"Vince Cable's comment that the government's proposed immigration cap is doing a lot of damage to British industry is right.

"The idea that a global trading nation like ours should stop talent from overseas coming to work or study here is good neither for our economy nor for our world leading position in education and research. The government is hopelessly at sea on this."