Brexit: Boris Johnson dealt huge blow as DUP refuses to back his deal
The Prime Minister is hoping to bring back a deal from the Brussels meeting of European leaders while winning the backing of the DUP, which also wields influence over some Tory Brexiteers.
But Ms Foster and her deputy, Nigel Dodds, released a joint statement hours before the summit was due to begin on Thursday, highlighting three major obstacles.
"As things stand, we could not support what is being suggested on customs and consent issues, and there is a lack of clarity on VAT," they said.
"We will continue to work with the Government to try and get a sensible deal that works for Northern Ireland and protects the economic and constitutional integrity of the United Kingdom."
Mr Johnson has been in close and continued contact with the pair as he tries to shore up their support ahead of Saturday's key deadline to prevent a delay to Brexit.
But his chances of ending the deadlock are in doubt over the sticking points highlighted by the key Tory allies.
The DUP is digging in over the prospect of a customs border between Northern Ireland and the rest of the UK, as well as the issues of consent regarding the suspended Stormont Assembly.
Another major issue in the PM's proposals are whether EU VAT rates would apply in Northern Ireland.
Talks between the UK and the EU are set to go down to the wire before the two-day summit.
Mr Johnson needs to get a deal approved before the weekend if he is to avoid a major clash over asking for an extension to the current October 31 deadline.
The Benn Act pushed through Parliament by no-deal opponents states that he must seek a delay if MPs do not give their backing to an agreement on Saturday, when an extraordinary Commons showdown is anticipated.
With fears that there is now insufficient time for a legal text to be hammered out in time, a compromise could see EU leaders back a political agreement and a second summit scheduled.
The DUP has had three meetings with the PM in as many days.