Philip Hammond has risked stoking Tory divisions over Europe by saying the UK should seek a "middle way" in Brexit negotiations in order to maximise access to EU markets.
The Chancellor said there were critics on both sides of the Brexit divide in the Tory party who did not back a "pragmatic" approach to leaving the European Union (EU).
The comments come after he was rebuked by Downing Street for saying he hoped the UK and the EU would only move "very modestly" apart in trade terms - although Mr Hammond said he had not spoken to Theresa May since he delivered the speech which triggered the latest round of Tory turmoil.
In a sign of the unrest in Conservative ranks, leading Brexiteer Jacob Rees-Mogg has warned the Government's "timid and cowering" approach risked squandering the potential gains of leaving the EU.
However, Mr Hammond insisted the approach to Brexit would not be swayed by Tory rebels on either side of the EU divide.
"There are people on both sides of this argument who do not support us in our intention to deliver the Brexit that the British people have mandated in a pragmatic way that protects British businesses and British jobs," he told Sky News.
"There are people that wanted to stay in the EU customs union, we reject that argument.
"There are people that want us to sever our trade links with Europe and give up this market, we reject their arguments too.
"We have got to stick to the middle way, which is negotiating the maximum access we can get to European markets compatible with the red lines we have already set out about repatriating control over our laws, our borders and our money."
Defending his "very modest" comments, Mr Hammond said: "The smaller the changes that happen to our access to market and to frictions at the borders, the better."
In response to Mr Rees-Mogg's criticism, Health Secretary Jeremy Hunt insisted the Government's approach to Brexit was not "timid".
He told the BBC Radio 4 Today programme: "Anyone who uses the word 'timid' about this Prime Minister is absolutely wrong.
"This is the Prime Minister that gave us absolute clarity after the Brexit vote that we were going to get back control of our laws, our borders, our money - the most profound strategic decision any prime minister has to make in the current circumstances."
Mr Hunt said the UK should expect "very limited" changes - or possibly none at all - to EU market access in a Brexit deal.
"We actually start with 100% alignment and that means - and this is the crucial point that he was making - is that we should be able to expect very limited and possibly no changes to market access as a result of the free trade deal we negotiate. That is something we can be very positive about."
In a speech on Friday, Brexit Secretary David Davis will seek to reassure Tory Eurosceptics that the UK will exercise its independence as soon as the country leaves the EU.
He will insist that Britain will be able to sign trade deals with other countries during the transition period after leaving the EU in March 2019, despite being largely tied into Brussels' rules during a two-year post-Brexit transition.
Speaking in Middlesbrough, he will say: "As an independent country, no longer a member of the European Union - the United Kingdom will once again have its own trading policy.
"For the first time in more than 40 years, we will be able to step out and sign new trade deals with old friends, and new allies, around the globe."
While the UK will replicate the effects of the EU customs union during the "implementation period", this "should not preclude us from formally negotiating - or indeed signing - trade agreements".
Any such deals would enter into force at the end of the implementation period.