The Reform UK leader intervened after a petition accusing Labour of breaking its election promises hit three million signatures, forcing it to be debated in Parliament.
The petition was started in November by publican Michael Westwood and surged to one million supporters in the space of just a couple of days.
Any petition that surpasses 100,000 signatures must be debated in Westminster Hall.
Liberal Democrat Jamie Stone described the support for his call to arms as “encouraging”, suggesting there was huge support across Britain for a fresh national poll.
Nigel Farage warned Labour and the Tories that the old order is breaking down
Mr Farage used the debate to warn Labour that its dwindling popularity could slump further if it continues to betray voters on immigration.
He boasted that Clacton had recorded the third-highest level of support for Mr Westwood’s petition of any constituency.
Mr Farage argued: “The broader problem is the economy as a whole: the economy works on confidence, people borrow money and lend money according to confidence in each other.
“And with the PM and the Chancellor, we’ve got two people who look like they’re going to a family funeral every day. There is an air of miserablism. The Prime Minister is the complete opposite to Tony Blair – this isn’t ‘things can only get better’, it’s ‘things can only get worse’!”
He concluded: “I think the whole system is in need of fundamental change. This is a symptom of a much bigger cry for a different kind of politics in the UK.
“You can all con yourself as much as you like, the old two-party system is breaking up before our eyes.”
Labour MP Yasmin Qureshi argued claimed that the petition was “hijacked” and that people were “playing party politics”.
The long-serving Labour MP told Westminster Hall that the petition’s level of support was down to “misinformation” and “foreign interference”.
This claim sparked loud laughter from opposition MPs.