Theresa May still has full confidence in Boris Johnson after his explosive comments on Brexit, Downing Street has said.
The Foreign Secretary told a private dinner there was a risk Brexit "will not be the one we want" and would keep the UK "locked in orbit" around the EU.
At the gathering of the Conservative Way Forward, a Thatcherite campaign group, he branded the Treasury the "heart of Remain" and claimed negotiations were approaching a "moment of truth".
Mr Johnson called for "guts" in exit talks and warned of a Brexit "meltdown".
Friends of Mr Johnson said it was "disappointing" that the dinner had been covertly recorded.
But senior Conservative Sarah Wollaston suggested Mr Johnson knew the comments would be leaked.
She tweeted: "Boris 'leak' a bit like him using the Tory WhatsApp group as a kind of deniable press briefing.
"Dressing up publicly broadcast insults under the cover of a 'private' discussions won't wash."
Scottish First Minister Nicola Sturgeon said the Foreign Secretary had "no credibility whatsoever".
"These leaked comments this morning beggar belief," she told BBC Breakfast.
"It speaks volumes that Theresa May cannot get rid of Boris Johnson or any other of her Cabinet members who are causing so much difficulty because of the weakness at the heart of her position."
In comments captured in a recording obtained by BuzzFeed News, Mr Johnson said the Prime Minister was "going to go into a phase where we are much more combative with Brussels".
He added: "You've got to face the fact there may now be a meltdown. OK? I don't want anybody to panic during the meltdown. No panic. Pro bono publico, no bloody panic. It's going to be alright in the end."
Mr Johnson suggested Chancellor Philip Hammond's department was "basically the heart of Remain" and said the UK could end up "in the customs union and to a large extent still in the single market".
The Cabinet minister was speaking to around 20 people dining in a private room after a reception at the Institute of Directors on Wednesday night.
He said: "Unless you make the change, unless you have the guts to go for the independent policy, you're never going to get the economic benefits of Brexit. You'll never get the political benefits of Brexit."
Mr Johnson said fears about the border on the island of Ireland were out of proportion.
"It's so small and there are so few firms that actually use that border regularly, it's just beyond belief that we're allowing the tail to wag the dog in this way," he added.
"We're allowing the whole of our agenda to be dictated by this folly."
Mr Johnson also suggested Donald Trump would "go in bloody hard" and "might get somewhere" in the exit talks if he was in charge.
Former Tory leader Lord Howard said Mr Johnson's warning of a Brexit "meltdown" was part of the "spills and thrills" of EU withdrawal negotiations.
The Foreign Secretary's comments are the latest Brexit headache for the Prime Minister, who is in Canada for the G7 summit.
The Foreign Secretary's deputy, Sir Alan Duncan, raised eyebrows in Westminster when he floated the possibility of a referendum on the exit deal.
Mrs May also met twice with David Davis before flying out to the summit amid reports the Brexit Secretary was considering resigning unless she set a clear time limit on the temporary customs arrangement.
Friends of Mr Johnson said: "This was a private dinner under Chatham House rules so it is sad and very disappointing that it has been covertly recorded and distributed to the media."