Theresa May’s Brexit strategy is in disarray after the Irish Prime Minister dramatically accused her of reneging on an agreement that would have ended the deadlock in the talks.

On a day of drama, the Prime Minister pulled the plug on a deal on the Irish border after it was rejected by the Democratic Unionist Party which props her up in power – triggering claims she is being “held to ransom”.

The embarrassment left Ms May scrambling to arrange crisis talks with the DUP before she heads back to Brussels later this week, with the clock ticking on the negotiations.

EU leaders have demanded she guarantee there will no hard land border in Ireland before a summit next week, if the talks are to move on to discussing future trade and a transitional deal.

The unravelling of the deal also left many Conservatives questioning Ms May’s handling of the talks, amid disbelief that the DUP had not been squared off in advance.

The talks broke down after Arlene Foster, the DUP leader, ruled out any move “which separates Northern Ireland economically or politically from the rest of the United Kingdom”.

“We have been very clear. Northern Ireland must leave the EU on the same terms as the rest of the United Kingdom,” she said, speaking at Stormont.

The party – despite being the Tories’ partner in government – appeared to be blindsided by the UK’s apparent concession of “regulatory alignment” on both sides of the border, to avoid checks.

Within 20 minutes, Ms May interrupted her talks with Jean-Claude Juncker, the EU Commission President, to telephone Ms Foster. When she went back to the lunch, the deal was off.

Later, Leo Varadkar, the Irish Prime Minister, went on the attack, accusing Ms May of reneging on a firm agreement to solve the border controversy and kick-start the talks.

“The responsibility of any prime minister is to ensure that they can follow through on agreements that they make and we are surprised and disappointed that they haven’t been able to,” he told a Dublin press conference.

The UK government and EU leaders had agreed a text earlier in the day that “gave us the assurance we needed” – only for Ms May to ask for “more time”, he said.

At Westminster, both Labour and the Liberal Democrats seized on the role of the DUP. Jeremy Corbyn said: “The real reason for today’s failure is the grubby deal the Government did with the DUP after the election.

Theresa May relies on Arlene Foster’s DUP for her commons majority after losing it at the general election she called (PA Wire/PA Images) (PA)

Vince Cable, the Liberal Democrat leader, said: “The DUP must not be allowed to dictate the UK’s Brexit negotiations. This again shows the Conservatives are in office but not in power.”

And Ben Bradshaw, the former Labour minister, tweeted: “Britain is being held to ransom by a party that’s propping up the Tory Government and represents minority opinion in Northern Ireland.”

In Brussels, Ms May put a brave face on the disappointment, saying the two sides would “reconvene before the end of the week” for further negotiations.

“On many of the issues there is a common understanding. And it is clear, crucially, that we want to move forward together,” she said

The Irish PM said the UK and Ireland had reached an agreement (BBC)

“But on a couple of issues some differences do remain which require further negotiation and consultation and those will continue.”

Later, Donald Tusk made clear how close the EU believed it had been to a deal, tweeting: “I was ready to present draft EU27 guidelines tomorrow for #Brexit talks on transition and future.”

The European Council President argued an agreement at next week’s EU summit was “still possible”, but warned: “It is now getting very tight.”

In Dublin, Mr Varadkar said he was happy to give Ms May more time, saying: “I do trust her and I believe she is negotiating in good faith.”

But he rejected claims that “regulatory alignment” for Northern Ireland was a weakening of Dublin’s earlier demand for “no regulatory divergence”, insisting they meant the same thing.

If so, that adds weight to the argument that such a deal would see Northern Ireland effectively remain inside both the EU single market and customs union.

A draft of the agreement, obtained by the Irish public broadcaster RTE, read: “In the absence of agreed solutions the UK will ensure that there continues to be no divergence from those rules of the internal market and the customs union which, now or in the future, support North South cooperation and the protection of the Good Friday Agreement.”

Nicola Sturgeon was fast out of the blocks, insisting that – if Northern Ireland was to be allowed to “effectively stay in the single market” – then so should Scotland.

The First Minister’s call was quickly echoed by Carwyn Jones, her counterpart in Wales, and London mayor Sadiq Khan, who both demanded bespoke Brexit deals.

Intensive talks will now take place between the Government and the DUP over the next few days and the Cabinet is expected to discuss the continued deadlock on Tuesday.

Boris Johnson and Michael Gove may seek answers on suggestions that the Prime Minister is willing to accept “regulatory alignment” for the whole of the UK, if necessary.

Pursuing that course would almost certainly trigger resignations by Brexiteers, who are determined that Britain has complete freedom to pursue trade deals with different regulations.

The Prime Minister’s spokesman refused to discuss that claim, saying: “This is an ongoing negotiation. I’m not going to comment on that.

Brexit: the deciders Show all 8 1 /8 Brexit: the deciders Brexit: the deciders European Union's chief Brexit negotiator, Michel Barnier Getty Brexit: the deciders French President Emmanuel Macron Getty Brexit: the deciders German Chancellor Angela Merkel Reuters Brexit: the deciders Commission President Jean-Claude Juncker EPA Brexit: the deciders The European Parliament's chief Brexit negotiator Guy Verhofstadt Getty Brexit: the deciders Britain's Prime Minister Theresa May Getty Images Brexit: the deciders Britain's Chancellor of the Exchequer, Philip Hammond PA Brexit: the deciders After the first and second appointed Brexit secretaries resigned (David Davis and Dominic Raab respectively), Stephen Barclay is currently heading up the position PA

Anti-Brexit campaigners also hit out at the DUP’s role in the affair.

“It seems clear that Arlene Foster and the DUP are calling the shots and now are running the Government. Labour and Conservative remain minded MPs outnumber this sad little rump by more than ten to one. It is time for these people to stand up and make themselves heard,” said Eloise Todd, chief executive of Best For Britain.

“While DUP MPs might have cost Theresa May more than Pogba, it is the British public who are paying the price for their intransigence.