Philip Hammond raised the prospect that MPs will revoke Article 50 this week rather than allow Britain to leave without a deal if Brexit talks collapse.

The Chancellor warned on Tuesday that the value of the pound could fall significantly if Theresa May fails to reach agreement on a Brexit delay with Brussels.

He suggested that the impact of uncertainty on the markets could encourage MPs to vote to reverse Brexit by revoking Article 50.

David Lidington, the Minister for the Cabinet Office, is said to have warned that the Government would no longer be in control and that Parliament and the Speaker would determine how to proceed.

Mr Hammond and Mr Lidington made the comments during a meeting on Tuesday morning in which ministers including Michael Gove, Jeremy Hunt, James Cleverly and Chris Grayling "war-gamed" a series of scenarios for this week.

Mr Hammond, the Chancellor, and Mr Gove, the Environment Secretary, both raised the prospect that MPs will vote to revoke Article 50 rather than accept no deal on April 12.