A Franco-Dutch company is poised to win the contract to make the iconic blue British passport after the UK leaves the European Union, the Telegraph understands.

In a move set to infuriate Brexiteers, sources have told this newspaper that Gemalto, which is listed on the Amsterdam and Paris stock exchanges, is close to signing the contract after undercutting rivals, including a British firm, by around £50 million.

Sir Bill Cash, chair of the influential European Scrutiny Committee, said the decision which is expected to be finalised shortly was "completely wrong and unnecessary".

The re-introduction of the British blue passport is seen as a important symbolic move and it is a blow to British companies that the contract is set to go abroad. It is understood that under EU single market rules, the contract had to be put out for tender across the continent.

Sir Bill said: "I think it is incongruous to say the least. It is just completely unnecessary and in fact it is symbolically completely wrong.