Chancellor George Osborne has said Portugal's need for a financial bail-out shows the government was right to prioritise cutting the UK's deficit.
Portugal could not "convince the world" it was able to pay its own debts, he said, while the UK's spending cuts plan had "near universal" support abroad.
And he accused his opponents of playing "Russian roulette" with the economy.
But shadow chancellor Ed Balls accused Mr Osborne of a "desperate piece of scaremongering".
Mr Osborne has come under pressure to spell out how much the UK will be liable to pay after Portugal became the third EU country in the past year to seek external help to sort out its debts.
But he did not refer to this during a speech to the British Chambers of Commerce, arguing instead that only the government's action had stopped the UK from finding itself in the same position as Portugal - as well as other bail-out recipients Greece and Ireland.
While these countries had not persuaded financial markets of their economic strategy, he argued the UK's deficit cutting plan - which would see spending cut by £81bn by 2015 - was "a crucial bedrock to stability at home and commanded near universal confidence abroad".
"If you hear the stories about the cuts and still wonder why our country needs to take these difficult decisions, then look at what is happening around us," he said. "First Greece, then Ireland, today Portugal. All of them countries that did not convince the world they could pay their debts.
"Today of all days you can see the risks which would face Britain if we were not dealing with our debts. The risks are not imaginary. They are very, very real."
And he turned his fire on Labour and other critics of the government's economic strategy.
"Those in our country who deny the urgent need to deal with our deficit are playing Russian roulette with Britain's national sovereignty," he said.
But shadow chancellor Ed Balls hit back, telling the BBC: "That is desperate scaremongering from a desperate chancellor who is taking a huge gamble, playing Russian roulette with our economy and I don't think he knows what the outcome's going to be.
"George Osborne's playing a completely political game, trying to claim, completely wrongly, that Britain had to have these spending cuts because we would end up like Greece or Portugal."
He said Britain was very different as it had long-term debt, low interest rates and was not in the single currency.
"We had a big deficit like America because of the global financial crisis, but they are doing it [tackling the deficit] in a steady way. He has gone in this reckless way."
Mr Balls also said the UK should not contribute to any Portuguese bail-out.
"I expect it to be sorted out by the eurozone," he said.
In his speech to the BCC conference, Labour leader Ed Miliband briefly touched on the Portuguese crisis, insisting that Labour's plans would boost growth.
Meanwhile, Business Secretary Vince Cable has acknowledged the UK would be obliged to contribute to two funds operated by the EU and the International Monetary Fund, should they be used as the vehicle for the bail-out.
Eurosceptic MPs have speculated that the cost could be as much as £4bn, although Mr Cable said it was "way too early" to talk about the details.
"We are members of the IMF and the EU and there are some implications from that but obviously we need to think through what the details are," he told the BBC.
But "the main lesson" from the Portugal situation, he argued, was "do not go where these southern European countries have been in terms of public finance".
He added: "We could easily have been in the position Portugal has been but we are not fortunately as a result of the steps we have taken."
UK Independence Party leader Nigel Farage has called for an urgent statement on the bail-out in the European Parliament, while the Conservative leader in Brussels and Strasbourg said the UK should boycott any moves to prop up the Portuguese economy.
"We wish the eurozone well in rescuing Portugal's economy but the UK cannot and should not play a part in the EU bail-out," MEP Martin Callanan said, stressing there were sufficient funds in the eurozone fund to cover all eventualities.
"British voters will not accept that at home we are making tough but fair savings only to send money to countries that should never have been allowed to join the eurozone in the first place."