Gordon Brown has unveiled a blueprint for post-Brexit Scotland that he hopes will sway voters towards remaining in the UK if and when a second referendum takes place.

In a keynote speech, the man who served for three years as Labour Prime Minister, and whose intervention in the 2014 referendum is credited with influencing the outcome, outlined a “third option” for Scotland.

It calls for Holyrood to be handed a raft of new powers after Britain’s exit from the European Union, including the ability to set VAT rates, sign international treaties, and regulate the environment, employment and energy.

He also demanded the repatriation to Scotland of £800m now spent by the European Union and propose the Bank of England becomes the Bank of England, Scotland, Wales and Northern Ireland to “reinforce the fact that pound is for everyone”.

Mr Brown was speaking in Fife at the Festival of Ideas against the backdrop of a constitutional standoff between Theresa May and Nicola Sturgeon over a second independence referendum.

In a surprise announcement on Monday the Scottish First Minister said she would seek a section 30 order in the Scottish Parliament to enable her to demand a referendum on Scotland’s future.

But Downing Street rejected the proposal, saying “now is not the time” for another vote.

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It also comes after Clive Lewis, a former member of Labour’s Shadow Cabinet and close ally of Jeremy Corbyn, told The Independent that in order to “save the union” the party’s two separate wings in England and Scotland should split.

Mr Brown said a new form of federal home rule is needed to unite the country and avoid years of "bitter division".

Mr Brown, an architect of the 2014 "vow" promising Holyrood more powers in the event of a No vote to independence, alsol proposed a range of controls should be passed to the Scottish Parliament after Brexit.

Theresa May: Now is not the time for Scottish independence referendum

He added: "The third option, a patriotic Scottish way and free from the absolutism of the SNP and the do-nothing-ism of the Tories, is now essential because post-Brexit realities make the status quo redundant and require us to break with the past.

"The status quo has been overtaken by events because unless powers now with the European Union are repatriated from Brussels to the Scottish Parliament, the Welsh Assembly and the regions, Whitewall will have perpetrated one of the biggest power grabs by further centralising power.

"Tory and nationalist extremism should not rob us of a third option that can give the Scottish people more powers, offer honest answers about how we can pay for our public services and, faced with the post-Brexit threat to our employment and industry, address the urgent issue of how we create new jobs by exporting and trading successfully with Europe and the rest of the world.

"Most of all, a new third option can unify our country and end the bitter and divisive Yes v No conflict that will continue to rip us apart.

Scottish independence: Nicola Sturgeon announces second referendum plans

"It is time to transcend the bitter division and extremism of an inflexible, die-hard conservatism at war with an intransigent and even more hardline nationalism."

Mr Brown has already pledged to join forces with the Scottish Labour leader Kezia Dugdale to probe an alternative to the “constitutional extremes offered by the SNP and the Tories”.

"Last month, I was delighted to secure the support of party conference for our vision of a federal UK,” Ms Dugdale added.

"Our call for a reformed UK is about meeting the demand for change. One message from the independence and EU referendums was that people wanted more control over their lives. That's why Labour's plan for a People's Constitutional Convention and a federal UK will transform where political and economic power will lie in our country.

Jeremy Corbyn: Absolutely fine for a vote to go ahead on Scottish independence