Theresa May has said she will not agree a draft withdrawal agreement drawn up by the European Commission.
The Prime Minister said the text - which proposes a "common regulatory area" between the EU and Northern Ireland - would "threaten the constitutional integrity of the UK".
And she told the House of Commons: "No UK prime minster could ever agree to it.
Released in Brussels by chief Brexit negotiator Michel Barnier, the EU text puts into legal terms the Joint Report agreed by Mrs May and European Commission president Jean-Claude Juncker in December, and is due to be agreed by the remaining 27 EU states next month.
On the crucial issue of the Irish border, the draft text spells out in detail how the principle of "regulatory alignment" agreed in December would be implemented if the UK fails to find technological or diplomatic solutions to keeping the border open.
If such solutions are not found, the draft text states, "the territory of Northern Ireland, excluding the territorial waters of the United Kingdom ... shall be considered to be part of the customs territory of the Union".
It suggests that EU and UK customs authorities should jointly oversee movements between Northern Ireland and the British mainland, while Europe would retain control over aspects of taxation and state aid in the six counties.
Answering questions in the Commons less than an hour after the publication of the text, Mrs May told MPs: "The draft legal text the Commission have published would, if implemented, undermine the UK common market and threaten the constitutional integrity of the UK by creating a customs and regulatory border down the Irish Sea, and no UK prime minster could ever agree to it.
"I will be making it crystal clear to President Juncker and others that we will never do so."
She said she stood by the deal struck in December, but left no doubt that she wants the withdrawal text rewritten, stating that UK negotiators would talk to Brussels about how the Joint Report "should be translated into legal form in the withdrawal agreement".
But Mr Barnier signalled frustration at the lack of progress in the negotiations, telling a Brussels press conference: "We must pick up the pace."
He repeated his warning that agreement on the transition deal following Brexit sought by Mrs May is "not a given".