John McDonnell said Labour in government would seek a "negotiated relationship" to ensure "tariff-free access" to "a single market" and "a customs union"

Labour would try to stay in a "reformed single market" if it was conducting Brexit negotiations, John McDonnell has said, in a fresh signal of the party's support for a "soft" withdrawal from the European Union.

The shadow chancellor said he stood by his assertion that remaining inside the single market under current rules, which include accepting free movement of EU citizens, would not respect the Brexit referendum result.

But he said Labour in government would seek a "negotiated relationship" to ensure "tariff-free access" to "a single market" and "a customs union".

Discussing shadow Brexit secretary Sir Keir Starmer's comments that Labour would seek to remain " aligned" with EU rules to ensure the UK can retain the benefits of single market membership, Mr McDonnell said: "What I said is that remaining within the single market would not respect the referendum result.

"What we've been using as the phraseology, a single market, not the single market, and a customs union not the customs union, so therefore a reformed single market or a new negotiated relationship with the single market - and (Sir) Keir was actually putting our position yesterday."

Answering questions at an economic report launch in the City of London, he went on: "We want to be as close as we possibly can to ensure tariff-free access.

"It isn't just about semantics, it's about choosing the objectives that we want overall which is protecting the economy and protecting jobs.

"That for us means as close a relationship with the single market as we can and possibly a customs union.

"The point Keir was making yesterday and which we have reiterated time and time again is we want to keep all the options on the table and that way we think we can protect the economy and at the same time get a negotiated settlement with Europe itself."

Labour peer Lord Liddle, a former adviser on Europe to Tony Blair, said the party's position "had been all over the place".

He said: "The logic of the position Keir was taking yesterday ... is that we should go for full membership of the single market and customs union in the long term."

Responding to Mr McDonnell's comments, Lord Liddle told BBC Radio 4's World at One that the shadow chancellor was adopting a "have your cake and eat it position".

"It's saying 'we want everything, but the European Union has to change first'. I suspect that's pretty un-negotiable," he said.

"I would be rather disappointed if that ended up as Labour's position."