Sajid Javid and Philip Hammond have clashed over free movement after the Chancellor said that EU workers should be given "preferential" treatment in a bid to win over Angela Merkel and strike a post-Brexit trade deal.

The Telegraph has learned that official minutes from the Chequers summit state that the Chancellor said he "disagreed with the Home Secretary on labour mobility and ending free movement".

He made the comments after Mr Javid, the Home Secretary, told Cabinet at the meeting that "free movement had to end" and that there could be "no back door".

He argued that "labour mobility" should be limited to current international obligations but Mr Hammond argued that the Government should "keep options open" for "preferential mobility arrangements".

"Such an agreement would be very important for the Chancellor of Germany," he said. "If the UK sought her help to deliver this deal, it would need to be prepared to negotiate on this point."

It comes amid growing concern among Eurosceptic Tory MPs that the Prime Minister is poised to make a significant climbdown on free movement as part of Brexit negotiations.