Leaving the European Union would tip the UK into a year-long recession, with up to 820,000 jobs lost within two years, Chancellor George Osborne says.
Publishing Treasury analysis, he said a Leave vote would cause an "immediate and profound" economic shock, with growth between 3% and 6% lower.
David Cameron said it was the "self-destruct option" for the country.
But Boris Johnson dismissed the study as "more propaganda" from the Remain side which he claimed was "rattled".
Former Chancellor Lord Lawson accused the government of trying to "scare the pants" off voters while Brexit-supporting economist Patrick Minford said the assessment ignored all the "upsides" from leaving, including the money saved from not being a member of the Common Agricultural Policy and not having to abide by EU regulation.
The BBC's assistant political editor Norman Smith said the Treasury report on the economic consequences of leaving - which comes one month before the vote on Britain's EU membership on 23 June - was "even gloomier" than had been predicted.
The Treasury's "cautious" economic forecasts of the two years following a vote to leave - which assumes a bilateral trade agreement with the EU would have been negotiated - predicts Gross Domestic Product would grow by 3.6% less than currently predicted.
In such a scenario, it suggests sterling would fall by 12%, unemployment would rise by 520,000, average wages would fall by 2.8% and house prices would be hit by 10%.
A second, "severe shock" scenario, also modelled by the Treasury, predicts what would happen if Britain left the EU's single market and defaulted to World Trade Organization membership.
In this scenario, after two years GDP would be 6% lower, up to 820,000 jobs could go, take-home pay would fall by 4%, house prices would fall by 18% and the pound would be 15% lower.
By BBC economics editor Kamal Ahmed
Sometimes this debate can feel a little like "my plague of frogs is worse than your plague of frogs".
And we could all be forgiven for becoming a little fed up with politicians shouting at each other, particularly when they claim, as the prime minister did earlier, that "this is what happens" to the economy, without a nod to "coulds" or "maybes".
These are forecasts, not definitive outcomes.
But, political hubris to one side, the Treasury analysis can be set apart from the "he said, she said" tenor of much of the EU referendum debate. It is based on a well-understood and tested economic model.
It might be wrong, or the outcomes might be substantially different once real events take hold - as is true of all forecasts - but it is very much worth the paper it is written on. Read Kamal's full analysis
On a visit to B&Q's head office on the south coast, Mr Osborne warned voters not to choose a "do-it-yourself recession" for Britain.
"It's only been eight years since Britain entered the deepest recession our country has seen since the Second World War. Every part of our country suffered," he said.
"The British people have worked so hard to get our country back on track. Do we want to throw it all away?"
He said the analysis had been "peer reviewed" prior to publication by Charlie Bean, a former deputy governor of the Bank of England, and that the economist had said it was based on "reasonable estimates" and "best practice procedures".
Mr Cameron said the report chimed with other analysis by institutions such as the Bank of England and the IMF, likening a decision to vote for EU exit, so soon after the last recession, to "surviving a fall and then rushing back to the cliff edge".
The Treasury says it modelled the impact of a leave vote by looking at three key factors: the "transition effect" of the UK becoming less open to trade; the impact of "uncertainty" on the economy; and the potential "volatility" of financial markets.
A previous Treasury report, which looked at the long-term effect of an EU exit, claimed households would be £4,300 a year worse off, and the economy 6% smaller by 2030.
The Vote Leave campaign said the worse-case scenario painted by the Treasury was bleaker than the Great Depression of the 1930s and the Treasury had been "hopelessly wrong" in previous forecasts, including in its support for the Exchange Rate Mechanism in the early 1990s.
Former cabinet minister Iain Duncan Smith said he did not believe there would be any "economic shock" from leaving, citing economists who have argued the economy would be able to add nearly a million new jobs by negotiating new trade deals.
"Every Treasury report has a central presumption from which there are downsides and then there are upsides," he told Radio 4's Today.
"They have chosen today to only produce the downsides...That makes this report categorically unfair and biased. I don't think that downside exists for the UK."
There was "not one word about the risks of remaining", the former work and pensions secretary added, and by ignoring this the government was "misusing its power and misusing the civil service".
Mr Duncan Smith said he was "deeply disappointed" that his former colleague Sajid Javid was among those defending the report, suggesting he had heard the business secretary say privately before the referendum was called "how much he wanted the UK to leave the EU".
By BBC political correspondent Tom Bateman
This is the second time the Treasury has released a major document used by Remain campaigners to claim there will be serious damage to Britain's economy in the event of a vote to leave the EU.
To vandalise a well-worn election slogan - it tells us that Stronger In's referendum strategy is sticking with three priorities: the economy, the economy, the economy.
It became clear weeks ago the Remain camp's playbook involved repeatedly trying to appeal to wavering voters with what were presented as sober economic assessments on the risks of leaving the EU.
Vote Leave are still fighting on this turf, but recent days have seen their campaign shift emphasis solidly to the issue of immigration - with what were claimed to be the risks of Turkish EU membership - a noticeable change of tack which fellow out campaigners in Ukip (not part of the officially designated campaign) had been calling for, believing it key to winning over undecided voters.
Sources close to Mr Javid have denied this.
The business secretary, who has acknowledged he wrestled long and hard before deciding to back Remain, earlier told Today that EU membership benefited UK business as the UK was in the single market but outside the euro and the Schengen border-free zone.
But John Mills, the chair of the Labour Leave, said the Treasury's economic warning was "grossly exaggerated". While there might be a "small blip" in the immediate aftermath of a vote to leave, he said the economy would soon recover to a higher level.
"These wild claims we hear from the Remain side do nothing to help their cause," he told the BBC News Channel.
And as the economic arguments intensify Grassroots Out, which is campaigning for the UK to leave the EU, has suggested Brussels will "lay siege" to the City of London in the event of a vote to Remain with "wave after wave" of new regulation.