Britain's involvement in the European Union's multibillion-pound Galileo satellite project will have to be "readjusted" to reflect its outsider status after Brexit, the European Commission has said.
Business Secretary Greg Clark said that he wants Britain to remain involved in "all aspects" of the 10 billion euro (£8.5 billion) programme to create a European encrypted navigation system to rival the USA's GPS.
But the Financial Times reported that the European Commission had written to ministers in January to warn that it would be "inappropriate" to divulge sensitive information about its plans for the post-Brexit period to a departing member state.
Ministers were reported to be furious at the move, which could freeze UK companies out of lucrative work on a project to which Britain has made a major contribution.
Defence Secretary Gavin Williamson was reported to have "hit the roof" at the prospect of the British armed forces being excluded from use of the powerful system.
Speaking during a visit to Estonia, Mr Williamson said the Commission's approach was "deeply disappointing".
"What has been notable as I have spoken to so many defence ministers across Europe is that they think the EU Commission's view is wrong and actually not only will be detrimental to Britain but will also be highly detrimental to European security," said Mr Williamson.
"So I very much hope the EU Commission will take the opportunity to see sense, recalibrate its position and not play politics on something that is so vitally important - which is European defence and security."
Commission spokesman Alexander Winterstein told a Brussels press conference on Monday: "The UK will become a third country on March 30 (2019) and the consequences for all EU policies are being assessed and discussed among the Commission, the 27 member states in the context of the Brexit preparedness work.
"Now is the right time to start thinking about adjusting co-operation with regard to the Galileo programme to the way the EU co-operates with other third countries in such matters."
Mr Clark said that British involvement in Galileo should continue as part of the "deep and special partnership" which Theresa May is hoping to negotiate with the EU.
"The UK has a world-leading space sector that has contributed a significant amount of specialist expertise to the Galileo programme," he said.
"The Government has been clear that we want our critical role in this important project, which will help strengthen European security, to continue as we develop our deep and special partnership with the EU.
"This could only happen with complete UK involvement in all aspects of Galileo, including the key secure elements which the UK has unique specialisms in and have helped to design and implement."
Liberal Democrat MP Layla Moran, a supporter of the Best for Britain campaign for a second EU referendum, said the issue was "a real own goal for the UK".
"These new revelations about the UK's exclusion from the Galileo satellite project are shocking, and reveal the true extent of this Government's negligent handling of the country's interests," said Ms Moran.
"This is going to hit us hard. Firstly because UK firms are set to lose lucrative industrial contracts to French firms - a disaster for jobs in this country. Secondly because, by leaving the EU, we've specifically chosen to downgrade our security capabilities - capabilities that Norway and the US are queuing up to gain access to.
"It's a real own goal for the UK, all because this Government is determined not to listen to anyone they deem 'anti-Brexit'. But this can't last forever: the time has now come to force politicians to listen by demanding a people's vote on the terms of Brexit."