A new Brexit faultline opened up in the Conservative party after Theresa May appeared to slap down Chancellor Philip Hammond over how much the Government will spend preparing for a ‘no deal’ Brexit.

The Prime Minister said she has now set aside £250m to help prepare for Brexit, including a no deal scenario, with aides saying she would spend “whatever necessary”.

But earlier on Wednesday, Mr Hammond signalled he wanted to wait until “the last point” before authorising spending on ‘no deal’ preparations and appeared unwilling to discuss further funds.

Ms May’s intervention was seized upon by Brexiteers, who accuse Mr Hammond of creating ambiguity over the UK’s stance, with some concerned his words will be seen as a sign the UK is not serious about quitting talks without a deal.

But Mr Hammond’s supporters hit back, arguing that the Treasury is being “realistic” about how preparations should take place, while one MP argued that some Brexit-backers are “deluded” over the ease of withdrawal.

The row is particularly pertinent coming in the week when Whitehall departments are bidding for extra money ahead of the budget, with some estimates suggesting hundreds of extra civil servants are needed for the job.

Speaking in the House of Commons, Ms May was cheered by Brexit-backing MPs as she said: “Where money needs to be spent, it will be spent.”

Aides said the £250m for Brexit preparations, including for ‘no deal’, came on top of £412m already spent on contingency planning.

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They added that is what the PM had deemed necessary “at this stage” and that she would be willing to spend “whatever necessary”.

Downing Street rejected suggestions that Ms May's comments were a slapdown to the Chancellor, despite his differing tone earlier in the day.

The Chancellor wrote in an article that it would be “irresponsible” to commit large amounts of extra spending on ‘no deal’ Brexit preparations, adding that it would divert cash from the NHS and education.

In a committee he later said it could prove unnecessary if a good deal is struck with Brussels, adding: “I don't believe that we should be in the business of making potentially nugatory expenditure until the very last moment when we need to do so.

“We will be ready. We will spend the money in a timely fashion to ensure we are ready, but we will not spend it earlier than necessary just to make some demonstration point.”

One MP who is a supporter of the Chancellor’s approach said: “Philip clearly went to the committee wanting to talk about his article. He wrote it to slap down a few people.

“But because Number 10 are still trying to talk up the ‘no deal’ concept, they exploded and didn’t want it looking like the Chancellor was not going to spend any money preparing for it.

Theresa May: "We are committing money to prepare for Brexit including a no deal scenario"

“What’s at the heart of this is the usual thing that the Treasury is trying to be realistic and not shoot ourselves in the foot, while the PM is trying to keep the Brexiteers happy and walking a line.”

Conservative MP and leading Brexit-backer Bernard Jenkin confirmed that he was “very pleased” to see the Prime Minister making clear departments would have money they needed to prepare for ‘no deal’.

Asked if Ms May had put the Chancellor in his place, Mr Jenkin said: “She’s cleared up some of the ambiguity that the Chancellor left, yes, how can I put it more diplomatically than that?”

He also accused the Treasury having a mind-set that is “jaundiced” about Brexit, before demanding a more positive approach.

Brexit-backing MP Bernard Jenkin was 'pleased' with the Prime Minister's words (Chris Ison/PA Archive)

But ex-minister Stephen Hammond told The Independent MPs recognised the Treasury was trying to take a sensible approach.

He said: “Bernard [Jenkin] is obsessed that the Treasury is trying to hold up Brexit, but what the Treasury is saying is that we simply have to be prepared for every eventuality.

“This is not an easy thing. Anyone who is saying any part of this process is easy is deluded.”

Labour MP Chuka Umunna, a leading supporter of the Open Britain campaign group, said minister are “more interested in fighting amongst themselves… than making sure we avoid crashing out of the EU with no deal”.