Boris Johnson has attacked proposals for a customs partnership after Brexit as “crazy” in a major public intervention over the way forward in the exit plan deadlock.
The Foreign Secretary said proposals favoured by Theresa May would create a “whole new web of bureaucracy”.
During a visit to the United States, he said forging ahead with the option would not comply with promises to take back control, and would hamper the UK’s ability to strike trade deals.
Divisions over how to proceed erupted at a “war cabinet” where Brexiteers rejected the customs partnership option.
But they believe a revised version will be put forward by No 10.
In an interview with the Daily Mail, Mr Johnson said: “It’s totally untried and would make it very, very difficult to do free trade deals.
“If you have the new customs partnership, you have a crazy system whereby you end up collecting the tariffs on behalf of the EU at the UK frontier.”
Business Secretary Greg Clark stressed on Sunday that thousands of British jobs depend on frictionless trade with Europe, in what was viewed as an attempt to revive the customs partnership model.
The “war cabinet” met last week, but failed to reach agreement on whether to back the hybrid customs partnership - which would see the UK collect import duties on behalf of the EU for goods arriving via British ports and airports - or the so-called “maximum facilitation” or “max fac” model relying on the extensive use of technology to minimise checks at the border.
It comes as Mrs May faces two more parliamentary defeats on her Brexit plan as it nears its final stages in the House of Lords.
Peers want to remove the Prime Minister’s planned exit day of March 29 2019 from flagship legislation that takes Britain out of the European Union.
A second amendment would allow EU laws to be replicated in the UK and allow future participation in its agencies.
Both proposed changes to the EU Withdrawal Bill have cross-party support in the upper chamber, which means they are likely to win in a vote.
The legislation returns for its sixth and final day at report stage in the Lords and will return for third reading on Wednesday.
Shadow Brexit minister Baroness Hayter of Kentish Town said: “On the final day of Lords Report, the main focus of our cross-party efforts to ensure the Bill is fit for purpose will be twofold.
“First, to ensure the UK continues to have strong working relations with EU agencies post-Brexit - something entirely in line with the Prime Minister’s recent Mansion House speech.
“Second, to introduce greater flexibility into how we leave the EU than currently allowed for by the Government’s ‘fixed exit day’ amendment.
“Introduced during the Commons stages of the Bill and driven no doubt by political PR, putting such a definitive deadline into law could have a negative impact on the final round of negotiations.
“On both issues, there is nothing to stop ministers coming forward with late concessions.
“Failing that, and as we’ve seen over the past few weeks, Peers won’t be shy in giving MPs further opportunities to scrutinise the fine detail of this Bill.”
So far, the Government has suffered 10 defeats at the hands of peers, including over a customs union and giving a decisive say to Parliament on the Brexit talks.
Meanwhile, a further change has been proposed to the legislation that would require the Government to negotiate continued membership of the EEA.
Labour peers will be ordered to abstain because it goes against official party policy.