The Democratic Unionist Party says it is ready to block the budget and potentially topple Theresa May if she compromises further on Brexit.

The Northern Ireland party – which is propping up the Conservatives in power – dramatically threatened to pull its support if its “red lines” over the Irish border are crossed.

The move comes as the UK and the EU edge towards an agreement that would allow regulatory checks between Britain and Northern Ireland, enraging the DUP.

Arlene Foster has described its red lines as “blood red”, prompting suggestions that the party could join with opposition parties to vote down the budget, on 29 October.

A DUP source told The Independent: “The government is very well aware of what our red lines are and it knows the importance we place on them.”

Asked if that extended to defeating the government in the crucial budget vote, the source replied: “I don’t think that’s a misplaced conclusion.”

Budget votes are viewed as an issue of confidence in a government – meaning defeat could fatally undermine the prime minister’s position and would trigger calls for a general election.

But Downing Street later insisted that losing a vote on the budget would not be confidence issue – and therefore a resigning matter – because the fixed-term parliament act had changed the rules.

The DUP had already threatened to vote against any Brexit deal if it created any new regulatory checks on goods crossing the Irish Sea, even if they take place away from ports.

But extending that threat to the budget is even more serious, because it would rip apart the terms of the “confidence and supply” agreement with the Tories – the “supply” part being money, through a budget.

Brexit threatens life on the Irish border: in pictures Show all 15 1 /15 Brexit threatens life on the Irish border: in pictures Brexit threatens life on the Irish border: in pictures An abandoned shop is seen in Mullan, Co Monaghan. The building was home to four families who left during the Troubles. The town was largely abandoned after the hard border was put in place during the conflict. Mullan has seen some regeneration in recent years, but faces an uncertain future with Brexit on the horizon Reuters Brexit threatens life on the Irish border: in pictures A defaced ‘Welcome to Northern Ireland’ sign stands on the border in Middletown, Co Armagh Reuters Brexit threatens life on the Irish border: in pictures Mervyn Johnson owns a garage in the border town of Pettigo, which straddles the counties of Donegal and Fermanagh. ‘I’ve been here since 1956, it was a bit of a problem for a few years. My premises has been blown up about six or seven times, we just kept building and starting again,’ Johnson said laughing. ‘We just got used to it [the hard border] really but now that it’s gone, we wouldn't like it back again’ Reuters Brexit threatens life on the Irish border: in pictures Farmer Gordon Crockett’s Coshquin farm straddles both Derry/Londonderry in the North and Donegal in the Republic. ‘At the minute there is no real problem, you can cross the border as free as you want. We could cross it six or eight times a day,’ said Crockett. ‘If there was any sort of obstruction it would slow down our work every day’ Reuters Brexit threatens life on the Irish border: in pictures John Murphy flies the European flag outside his home near the border village of Forkhill, Co Armagh Reuters Brexit threatens life on the Irish border: in pictures Potter Brenda McGinn stands outside her Mullan, Co Monaghan, studio – the former Jas Boylan shoe factory which was the main employer in the area until it shut down due to the Troubles. ‘When I came back, this would have been somewhere you would have driven through and have been quite sad. It was a decrepit looking village,’ said McGinn, whose Busy Bee Ceramics is one of a handful of enterprises restoring life to the community. ‘Now this is a revitalised, old hidden village’ Reuters Brexit threatens life on the Irish border: in pictures Union Flag colours painted on kerbstones and bus-stops along the border village of Newbuildings, Co Derry/Londonderry Reuters Brexit threatens life on the Irish border: in pictures Grass reflected in Lattone Lough, which is split by the border between Cavan and Fermanagh, seen from near Ballinacor, Northern Ireland Reuters Brexit threatens life on the Irish border: in pictures Donegalman David McClintock sits in the Border Cafe in the village of Muff, which straddles Donegal and Derry/Londonderry Reuters Brexit threatens life on the Irish border: in pictures An old Irish phone box stands alongside a bus stop in the border town of Glaslough, Co Monaghan Reuters Brexit threatens life on the Irish border: in pictures Billboards are viewed from inside a disused customs hut in Carrickcarnon, Co Down, on the border with Co Louth in the Republic Reuters Brexit threatens life on the Irish border: in pictures Seamus McQuaid takes packages that locals on the Irish side of the border have delivered to his business, McQuaid Auto-Parts, to save money on postal fees, near the Co Fermanagh village of Newtownbutler. ‘I live in the south but the business is in the North,’ said McQaid. "I wholesale into the Republic of Ireland so if there’s duty, I’ll have to set up a company 200 yards up the road to sell to my customers. I’ll have to bring the same product in through Dublin instead of Belfast’ Reuters Brexit threatens life on the Irish border: in pictures A disused Great Northern Railway line and station that was for customs and excise on the border town of Glenfarne, Co Leitrim Reuters Brexit threatens life on the Irish border: in pictures Alice Mullen, from Monaghan in the Republic of Ireland, does her shopping at a former customs post on the border in Middletown, Co Armagh. ‘I’d be very worried if it was a hard border, I remember when people were divided. I would be very afraid of the threat to the peace process, it was a dreadful time to live through. Even to go to mass on a Sunday, you’d have to go through checkpoints. It is terribly stressful,’ said Mullen. ‘All those barricades and boundaries were pulled down. I see it as a huge big exercise of trust and I do believe everyone breathed a sigh of relief’ Reuters Brexit threatens life on the Irish border: in pictures A bus stop and red post box stand in the border town of Jonesborough, Co Armagh Reuters

Until now, Conservatives have been confident that the DUP’s distrust of Jeremy Corbyn would prevent it doing anything that brought Labour closer to power.

Earlier, Ms Foster pointed out that the confidence and supply arrangement was “party to party”, rather than with Ms May herself – suggesting the DUP might be willing to bring her down.

Under the fixed-term parliaments act, losing a confidence vote no longer automatically triggers an election, because it creates a breathing space for a new government – under a new prime minister.

Ms May’s spokesman dismissed the idea of the budget vote bringing down the government, saying: “The fixed-term parliament act sets out the circumstances for a confidence vote.”

Mel Stride, a Treasury minister, tried to calm DUP nerves, insisting the prime minister had been “crystal clear on this issue of no border down the Irish Sea”.

“I am extremely confident from all that I know, that I have seen and all the discussions that I have had, that there will be a very, very firm position taken on this,” he told the BBC.

“The prime minister made it very clear no UK prime minister is ever going to put him or herself in the position where they start to unpick the economic and sovereign integrity of the UK.”

Ms May will meet EU leaders in Brussels next week to try to seal the deal on the Irish border – with plans that have yet to be shown to either MPs or the cabinet.

They would also see the entire UK remain in the EU’s customs territory until technology can prevent a hard border, raising Brexiter fears that the arrangement will become permanent.

Earlier, at prime minister’s questions, Ms May appealed to Labour MPs to put the “national interest” ahead of loyalty to Mr Corbyn when it comes to a vote on her Brexit plans.

The plea appeared to be aimed at her own MPs, after reports that up to 80 hardline Eurosceptics are ready to defy her and vote it down.