DUP leader Arlene Foster has said her party will not accept a Brexit deal that "separates" Northern Ireland from the rest of the United Kingdom.
It comes after a leaked draft agreement that reportedly shows the UK and Republic of Ireland officials have tentatively agreed to keep Northern Ireland’s regulations in line with those of European Union after Brexit.
The draft deal text, obtained by Irish public broadcaster RTE, would effectively keep Northern Ireland in the single market and customs union after Brexit by keeping EU regulations in place, unlike the rest of the UK.
Sources in Brussels however said that though officials on both sides were in broad agreement over the solution to the problem, Downing Street has so far felt unable to sign off on it.
RTE says the draft deal said: “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.”
It adds that this paragraph was later amended to say there would be “continued regulatory alignment” on the island of Ireland.
Speaking to a briefing of journalists in Westminster, Downing Street rubbished the draft leak.
"The PM has been clear that the UK is leaving the European Union as a whole and the territorial and economic integrity of the United Kingdom will be protected," the Prime Minister's spokesperson said.
Speaking at Stormont DUP leader Arlene Foster said: “We note the speculation emanating from the European Union exit talks regarding the Republic of Ireland and United Kingdom border.
"We have been very clear. Northern Ireland must leave the EU on the same terms as the rest of the United Kingdom. We will not accept any form of regulatory divergence which separates Northern Ireland economically or politically from the rest of the United Kingdom. The economic and constitutional integrity of the United Kingdom will not be compromised in any way.
"Her Majesty’s Government understands the DUP position. The Prime Minister has told the House of Commons that there will be no border in the Irish Sea. The Prime Minister has been clear that the UK is leaving the European Union as a whole and the territorial and economic integrity of the United Kingdom will be protected.
"We want to see a sensible Brexit where the Common Travel Area is continued, we meet our financial obligations, have a strictly time limited implementation period and where the contribution of EU migrants to our economy is recognised in a practical manner.
"The Republic of Ireland claim to be guarantors of the Belfast Agreement but they are clearly seeking to unilaterally change the Belfast Agreement without our input or consent.”
Earlier the DUP's Jeffrey Donaldson told reporters: "That is not our understanding of the UK Government's position."
Speaking to BBC Talkback DUP MP Sammy Wilson said: "It's purely speculation and we are commenting on speculation and I think it's better not to.
"Let me spell out the difficulties on what is suggested if indeed it is true.
"The government has made it very clear and even today again, that there will be no agreement made which would impact and create differences not just on a constitutional basis but on an economic basis that would make a difference between Northern Ireland and the rest of the UK.
"We will do nothing that would separate us from our main market which is the UK.
"That's why I suspect the kind of information you have been given is probably not correct."
When asked what impact it would have on the DUP/Tory confidence and supply deal Mr Wilson said he would not "deal speculatively on this".
He said: "They have repeated today that will in no way separate the economies or territorial integrity of the UK that's the agreement we have and we expect them to live up.
"I'm not going to let leaks from the Irish Government draw me down a road speculatively on what's going to happen.
"We have the political leverage in the House of Commons to hold the government to that agreement and we will do that."
Asked about the prospect of the UK giving ground on the issue of regulatory divergence, Sinn Fein's Declan Kearney said his party was adopting a "wait and see" approach.
"We have been down this road too many times before," he said.
"Let's have clarity, let's have certainty, let's have clarity around the issue of there being no imposed Brexit border and let's have certainty around the rights of all citizens in this part of the island of Ireland."
Sinn Fein has called for Northern Ireland to be afforded special designated status within the EU.
"Anything that emerges we will stress test against the criteria and requirements of designated special status," Mr Kearney added.
Ulster Unionist party leader Robin Swann said the leaked draft documentation "would fundamentally alter the relationship between Northern Ireland and Great Britain".
Mr Swann said: “The people of the United Kingdom have been bombarded with speculation over a potential deal to move Brexit negotiations to the next stage. What we need now are clear facts.
“Today`s leaked draft text, if proven to be the final text, would present serious challenges to the economic, constitutional and political integrity of the United Kingdom. It would undermine the Belfast Agreement, breach the principle of consent and fundamentally alter the relationship between Northern Ireland and Great Britain. No amount of 'constructive ambiguity' would cover that up. The Belfast Agreement was not constructed in Brussels.
“Anything that weakens our regulatory regime or means that regulations applicable in Northern Ireland could be set in Dublin or Brussels without consultation, rather than being established in Belfast or Westminster, would be wholly unacceptable. We would be left voiceless and have no say on their design or implementation. It would also mean that if the UK Government is negotiating future trade deals across the world, we would be seen as a place apart. Northern Ireland`s constitutional position should not be used as a bargaining chip.
“Whilst we are concerned at initial reports, we will reserve judgement until we have seen the final draft at which point we will deliver a considered response.”
SDLP Leader Colum Eastwood said "the DUP need to act in Northern Ireland's interest."
The MLA said: "For months, the SDLP has been making the case that the only way to avoid a hard border and a hard Brexit on the island of Ireland is to maintain membership of the Single Market and the Customs Union.
"Reports today that the UK could concede the principle there must be 'continued regulatory alignment' with the rules of the Single Market and the Customs Union across Ireland, particularly in areas of North/South cooperation is a positive move."
He added: " The Brexit negotiations must be driven by the best interests of people on these islands, not by narrow isolationist ideology. All steps must be taken to protect the North's economy, our political progress and the terms of the Good Friday Agreement. That has long been the position of the European Union. It is welcome that the British Government now seems to be accepting that position.
"The DUP now must move to act in Northern Ireland's interest, not simply serve their own interests."
Irish Taoiseach Leo Varadkar had been due to make a statement on the developments on the steps of Government Buildings in Dublin at 2.30pm but his appearance was postponed at short notice, apparently due to the fact that talks in Brussels were continuing.