Theresa May's inner "war cabinet" of senior ministers will meet on Wednesday to chart a course through some of the most difficult issues in the Brexit process.
The Brexit sub-committee meeting comes after it emerged the European Union wants to put in place a method to rapidly curtail the UK's single market benefits if it breaches agreements on a transition deal.
The plans would see Brussels able to restrict the UK's access to the single market without going through the lengthy European Court of Justice (ECJ) legal process.
A copy of the draft position paper circulating in Brussels said there should be a "mechanism" allowing the EU to "suspend certain benefits" of single market membership during the transition period.
Such a move would be considered if referring the matter to the ECJ "would not bring in time the necessary remedies", according to the document, which sets out the EU's position on a transition deal in legal language.
The document also said the UK would only be "consulted" when decisions are made on fishing quotas during the period.
Whitehall attempted to play down the significance of the draft text, insisting it would form the basis for a negotiation on the terms of a transitional deal, which is expected to last for around two years after the UK leaves the bloc in March 2019.
A Department for Exiting the European Union spokesman said: "This is a draft document produced by the EU that simply reflects their stated directives.
"The Secretary of State set out the UK's position in his speech in Teesside last month.
"Together these provide a solid foundation for the negotiations on the implementation period which have begun this week with the aim of reaching agreement by March European Council."
Mrs May will chair the European Union exit and trade (strategy and negotiations) sub-committee in sessions on Wednesday and Thursday to thrash out the UK's position on crunch issues regarding the future relationship with Brussels.
Wednesday's talks are expected to focus on immigration and Northern Ireland, with the future partnership being considered on Thursday.