Boris Johnson has reignited a cabinet row over Brexit by warning that talks with the EU are heading for a "meltdown" and describing Philip Hammond's Treasury as "the heart of Remain".

In an explosive leaked recording, the foreign secretary laid bare divisions at the heart of government by claiming pro-EU forces within the chancellor's department were trying to keep Britain "locked in orbit around the EU".

Mr Johnson told Tory supporters at a private dinner that gloomy economic forecasts were "mumbo jumbo" and the Northern Irish border row had been blown out of proportion, as fears over disruption to supplies of food and medicines were “pure millennium bug stuff”.

His comments are likely to threaten the fragile truce within the prime minister's top team, after Ms May spent a dramatic day brokering a customs compromise to head off resignation threats from her Brexit secretary, David Davis.

The row is also likely to overshadow the start of Ms May's trip to the G7 summit in Canada, where she is hoping to convince Donald Trump to row back from imposing swingeing tariffs on steel imports.

Mr Johnson, a leading Brexiteer, told a private dinner at the Conservative Way Forward that “there is an argument going on” in the cabinet but he believed that Brexit would happen and it would be “irreversible”.

“The risk is that it will not be the one we want," he said, in a recording obtained by Buzzfeed.

Mr Johnson blamed the Treasury for pushing an agenda to keep Britain tied to the EU, "in the customs union and to a large extent still in the single market".

“So not really having full freedom on our trade policy, our tariff schedules, and not having freedom with our regulatory framework either.”

The prime minister is going to be “much more combative with Brussels” going forward, which could lead to friction with EU leaders, he said.

“You’ve got to face the fact there may now be a meltdown. OK? I don’t want anybody to panic during the meltdown.

“No panic. Pro bono publico, no bloody panic. It’s going to be all right in the end.”

Mr Johnson also joked that the US president could do a good job of handling Brexit, confessing he was “increasingly admiring” of Mr Trump and suggested “you might get somewhere” if the US president was leading the negotiations.

“I have become more and more convinced that there is method in his madness," Mr Johnson said.

“Imagine Trump doing Brexit... He’d go in bloody hard…There’d be all sorts of breakdowns, all sorts of chaos.

“Everyone would think he’d gone mad. But actually you might get somewhere. It’s a very, very good thought.”

A source close to Mr Johnson said: “This was a private dinner under Chatham House rules [where all comments are unattributable] so it is sad and very disappointing that it has been covertly recorded and distributed to the media.”

Former Conservative leader Lord Howard said the warning of a Brexit "meltdown" was part of the "spills and thrills" of EU withdrawal negotiations.

Asked about Mr Johnson's claim that officials in the Treasury were working against the long-term gains of Brexit, Lord Howard said: "If there are people in the Treasury who are doing that then they shouldn't be doing that, and I deplore that."

Lord Howard added: "He's certainly right to say we shouldn't panic. I don't know about a meltdown. I'm not as close to the negotiations as Boris is.

"What we have to do is to focus on the essentials of the situation. The essentials are that the European Union wants a deal and there is every prospect therefore that if we hold our nerve that we could get a good deal, a good deal for them and a good deal for us, because it is in our mutual interests that that should happen."

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Meanwhile Labour MP Ian Murray, a supporter of the People’s Vote campaign, said: “Boris Johnson is utterly shameless. As these comments show, he knows we're going to get shafted with a bad Brexit deal, he knows how much damage it will cause to our economy, he knows it will result in a hard border re-emerging in Northern Ireland, but he couldn't care less.

“That this disgraceful charlatan holds one of the great offices of state in this country should be a source of constant shame and embarrassment to the Prime Minister. Boris Johnson cares about nothing except himself and his own ambition."

Earlier, Ms May had managed to broker a deal with Mr Davis over his demands for a time-limit on the “backstop” option that would keep the UK in parts of the customs union until a solution is found to the border issue in Northern Ireland.

The prime minister gave way to Brexiteers by making last-minute amendments to the plan, ensuring the backstop does not extend beyond December 2021, which critics say would keep Britain too closely tied to Brussels.