Britain staying in a customs union after Brexit would be the “best thing that could happen” to the European Union, Guy Verhofstadt said, as EU sources warned Brussels would dictate trade policy under such an agreement.

The UK could leave the EU by May 22, and avoid a Brexit extension of up to two years and the need to hold European elections, if MPs built a cross-party majority behind a customs union, Mr Verhofstadt said.

A customs union would help solve the vexed issue of the Irish border but it will prevent Britain from pursuing an independent trade policy, the European Parliament's Brexit coordinator said.

“There will be opposition [in the House of Commons],” he said, “I am an eternal optimist, but it would really be the best thing that could happen to us. A long delay is definitely not advisable for me."

MPs would also have to back the withdrawal agreement, which includes the controversial Irish border backstop and which they rejected for a third time last week.

The House of Commons is holding a series of indicative votes on Brexit this evening and MPs are expected to coalesce around a Kenneth Clarke amendment calling for a customs union.

A customs union is when a group of countries agree to abolish tariffs on goods traded between themselves and set the same tariff on goods imported from outside the customs union.