The Scottish First Minister said at the moment it was “difficult to see” how the PM could get the necessary votes to get her proposals through Parliament.
And she said “instead of just waiting for it to be defeated, right now we should be looking to get a better alternative on the table”.
Ms Sturgeon, speaking at the Scottish Federation of Small Businesses’ annual dinner in Glasgow, again stated that crashing out of the European Union is “not inevitable”.
And she argued it was “time to get something sensible on the table” as an alternative.
She said: “People will say the EU is not going to negotiate any other deal, well I don’t suspect they will want to go back to the drawing board.
“But if the UK was to come forward with what I think is the sensible option, what we in the Scottish Government have argued all along, that the UK is leaving the EU but is going to stay in the single market, all of it, and the customs union, I think there would be a willingness to negotiate that on the part of the EU.”
Such a move might require the Article 50 deadline of March 2019 to be extended “by a little bit”, she added.
But she said: “Worse things than that believe me have happened. So we will continue to argue as hard as we can for that sensible option.”
The SNP leader spoke about her “profound concern” that making special provisions for Northern Ireland as part of the Brexit plan would give that country “unfettered access” to the European market, leaving Scotland at a competitive disadvantage.
She told the audience: “I as First Minister spend a lot of time talking to companies that are considering investing in Scotland, employing people in Scotland, expanding existing operations, and we do really well at attracting companies to come and invest here, we’re the best performing part of the UK outside of London for attracting inwards investment.
“But every business that is thinking of setting up here will be looking at other places as well across the UK, perhaps across Europe. In recent years one of the most competitive places has been Belfast.
“If we find ourselves in a position in the future where we are competing for business and a company looking at Scotland is also looking at Belfast, and Belfast will have unfettered access to the whole European single market that they won’t have in Glasgow or Edinburgh or Fife or wherever Scotland, then we are going to be at a serious competitive disadvantage and it is really important we don’t allow that to happen to us.”