Cabinet heavyweights are using a marathon "away day" meeting to try and agree a unified Brexit stance following recent Tory clashes on how to move forward.
Theresa May is heading the "Brexit war cabinet" gathering at the Prime Minister's country residence of Chequers in a bid to get consensus ahead of delivering a keynote speech intended to lay out Britain's "end state" objectives regarding leaving the EU.
The meeting of the 11 member inner cabinet committee, which began early on Thursday afternoon and is slated to last eight hours, is set to thrash out the Government's stance on issues like how much divergence from the EU regulatory system the UK should seek after withdrawal, avoiding a hard border in Northern Ireland, and what type of customs arrangements with Brussels could be negotiated.
However, there was a setback to Mrs May's plans ahead of the meeting, as the European Commission released a document explicitly rejecting the PM's "three baskets" approach to future regulatory co-operation.
The approach, set out in her speech in Florence in September, envisages different areas in which the UK would either continue with existing regulatory frameworks, operate its own separate rules largely mirroring those in the EU or diverge significantly from the Brussels regime.
But a set of slides setting out the commission's negotiating position stated: "UK views on regulatory issues in the future relationship including 'three basket approach' are not compatible with the principles in the EuCo (European Council) guidelines."
British attempts to "cherry-pick" EU rules threaten the integrity of the single market, while efforts to preserve UK influence over EU decision-making after Brexit "risk to unsettle the EU 'ecosystem'", the slides warned.
The move came as Labour announced that Jeremy Corbyn will make a significant speech on Brexit policy on Monday, in an apparent attempt to steal a march on the Prime Minister, who is expected to use a high-profile address days later to set out her own vision of Britain's long term relationship with the EU.
Mr Corbyn has come under pressure from Labour MPs to provide clarity on his stance on membership of the single market and customs union, and a spokesman said on Wednesday that his thinking on the issue was "evolving and deepening".
Shadow chancellor John McDonnell made it clear that remaining in the single market would leave many voters feeling the referendum result had been ignored.
The Chequers meeting comes after leaked negotiating guidelines caused concern among Brexiteers, and the Government was forced to dismiss claims it was seeking a more open-ended transition deal after the UK formally quits the trading bloc in March 2019.
The paper stated the length of the "status quo" transition "should be determined simply by how long it will take to prepare and implement the new processes and new systems that will underpin the future partnership", which "points to a period of around two years".
However, MPs have warned that Britain could be stung with an extra £4-£5 billion Brexit "divorce bill" if a post-withdrawal transition period runs into 2021.
The European Scrutiny Committee said prolonging the "status quo" transition beyond the EU's preferred end date of December 31 2020 could make the UK liable for extra contributions to the Brussels budget.
Mrs May has only agreed to cover the EU budget to the end of 2020 as part of a £35-£39 billion divorce bill.