Theresa May is preparing to cave in to Labour demands on Brexit, Eurosceptic ministers fear, after they were told an “unpalatable” outcome would be better than a “disastrous” one.

The Prime Minister has made it clear that she wants cross-party talks wrapped up by the middle of next week, adding to suspicions that she is waiting until after tomorrow’s local elections before announcing a climbdown.

A Cabinet meeting yesterday was dominated by discussion of how the Government can get a Brexit deal through Parliament so that Britain can leave the EU before the current deadline of October.

Brexiteers still believe Mrs May can win round Tory rebels by making changes to the Northern Irish backstop, but the Prime Minister appears increasingly convinced that support from Labour is the only way to get the stable majority she needs for a divorce deal and the trade talks to come.

Downing Street sources insisted last night that the Government remains opposed to joining a customs union with the EU after Brexit - Labour’s number one demand - but Leave supporters fear Mrs May will agree with Labour a form of customs union in all but name.