Theresa May's Cabinet has agreed to implement all planning for a 'no deal' Brexit scenario in full and put the Army on standby to handle disruption, in a clear sign that the Government believes a sudden exit from the EU is more likely than ever.

A Downing Street spokesman said the Government would now "ramp up" 'no deal' preparations across all areas of trade with the EU.

“Cabinet agreed that with just over three months until our exit from the European Union we have now reached the point where we need to ramp up these preparations. This means we will now set in motion the remaining elements of our no-deal plans," they said.

The spokesman added: "Cabinet also agreed to recommend businesses now also ensure they are similarly prepared, enacting their own no-deal plans as they judge necessary."

In the House of Commons, defence secretary Gavin Williamson announced that 3,500 armed forces personnel were on standby "to support any government department on any contingencies they may need."

However David Gauke, the justice secretary, poured cold water on plans for a 'managed no deal Brexit' at the Cabinet meeting, describing the idea as a "unicorn that needs to be slaughtered."

The robust exchange came as Jeremy Hunt and other Cabinet ministers also "squashed" plans by Amber Rudd and prominent Remainers for "indicative votes" over Brexit.

During a two-and-a-half hour Cabinet there was a heated debate over the plans, which are supported by five Remain ministers.

A Cabinet source said that Jeremy Hunt, the foreign secretary, was strongly critical of the plan to hold "indicative votes" on different Brexit options with a view to testing the "will of the house".

Andrea Leadsom and other Eurosceptics in the Cabinet alao criticised the approach amid concerns that it will be used as a vehicle for a second referendum.

There was a "broad consensus" over no-deal planning and several ministers pushed for it to be made a "central assumption". Liz Truss, the Chief Secretary, suggested there should be daily meetings of the Government's Cobra emergency committee from the New Year to discuss no deal.

Reports this morning suggested that £500m was allocated to the Home Office for border and immigration officials; the Department for Environment Farming and Rural Affairs will receive £400m for a new IT system for food and fish exports, and Department for International Trade will receive £130m for new trade negotiators.

The large cash injection marks a significant shift in the Government’s Brexit strategy, and is expected to send a warning to Brussels that the UK is serious about walking away unless new concessions on the Irish backstop are granted.