EU leaders have agreed to begin "internal preparations" for Brexit trade talks with the UK, but say more work is needed before 'sufficient progress' is made before the next phase of Brexit negotiations can begin.
European Council president Donald Tusk confirmed the widely-expected move, which will be seen as a life-line to Theresa May after the original target of moving on to trade talks in October was not met.
The next window to agree to move Brexit talks forward will be at the Council summit in December.
Speaking at the end of the meeting in Brussels, Mrs May said she was "ambitious and positive" about the progress that had been made, but admitted that there remained "some way to go" before a breakthrough.
She dismissed claims that the UK Government had accepted EU demands for further payments over and above the roughly €20 billion already put forward in her speech in Florence. Mrs May said UK negotiators would continue to scrutinize EU financial demands "line by line", adding: "The British taxpayer wouldn't expect any less."
At a dinner with the other 27 EU heads of government on Thursday night, the Prime Minister presented her vision for a post-Brexit relationship in which the UK maintains "high regulatory standards" to remain in line with the European single market.
EU leaders took 90 seconds to agree summit conclusions, including their Brexit stance. Mr Tusk said in a tweet: "Brexit conclusions adopted. Leaders green-light internal EU27 preparations for 2nd phase."