Can I apply for PhD without recommendation from my masters advisor?
Can I apply for PhD without recommendation from my masters advisor?


Yes, you can apply, but you may experience great difficulty in getting accepted. 


  Additionally, wouldn't the admissions tutors suspect that something is going on if all my referees are undergraduate even when I am taking a master's course??


Most likely, yes.


  I am certain that his reference will be lukewarm or may even be negative as I am currently having difficulty getting along with him.


As others have suggested, the very important first step is to ask your advisor for a strong recommendation letter. If he agrees, no problem. If not, and there is nobody else that can comment in a strong, positive way about your research capabilities/potential, you may need to take a break from your studies and come up with a plan about how to move forward. I have been in such a situation.

I had a falling out with my MS advisor. I knew that he wouldn't write me a strong letter (I was not on speaking terms with him and I can't say much more than that). I also knew that I would need several strong recommendation letters commenting on my research capabilities/potential to continue on with my goal of pursuing a PhD. To get strong recommendations, I decided to go back into industry for a few years. In my field, a good percentage of industry jobs that I qualified for are heavily R&amp;D focused. A good couple of years back in that environment landed me some solid opportunities to work on some cool stuff and impress some people who were very willing to help me out with pursuing my long-term goals. 

I'd like to point out that this is still not a fail-safe approach: several schools I applied to explicitly asked me to submit a recommendation from my MS advisor. I explained to them my circumstance (it's actually a pretty good story), but that did not matter to them. I was very fortunate that one of my industry-based references was considered a big shot by several top schools I applied to, and for those schools that did not ask for a reference from my MS advisor, that worked out well for me. While there was a lot of hard work that went into my plan, I also feel in some ways that I got very lucky.

So, if you cannot get a strong recommendation from your MS advisor, be prepared to take some relatively drastic measures to improve your chances of success. Also, if it is possible in your field of study, leverage the skills you have obtained to build up some strong research references.