Prime Minister Boris Johnson is prepared to trigger Article 16 to suspend the Northern Ireland Protocol if the European Union refuses to renegotiate the trading arrangements.
Mr Johnson was ready to overhaul the protocol this week but was talked down by his Brexit Minister Lord Frost.
The Daily Telegraph reported that the Article 16 warning was issued to Dublin this week, with UK officials making it clear that it is the Prime Minister who is most in favour of the option.
Article 16 allows either the UK or the EU to suspend parts of the protocol if they believe it is causing serious economic or societal harm in Northern Ireland.
Both the UUP and the DUP have always outlined their opposition to the protocol, which sees checks on goods coming from the UK into Northern Ireland, while a number of protests have been held by loyalists in recent months.
Lord Frost confirmed this week that the UK believed the conditions for triggering Article 16 had been met and that the protocol in its current form is no longer sustainable.
He made is clear that the Government hopes to avoid triggering Article 16 and would rather rewrite the arrangement, in a bid to bring the European Commission back to the negotiating table.
The EU has said it will engage with the UK proposals but will not reopen the protocol.
Senior UK government sources did not dispute the claim but stressed that Mr Johnson had fully accepted the strategy, which was also endorsed by the Brexit Cabinet subcommittee known as “XS”.
“He [the Prime Minister] is more fed up and takes a harder line,” a government source acknowledged. “His instincts are more robust.”
The UK is now asking for a “standstill period” while the negotiations take place, during which grace periods covering the movement of supermarket goods, parcels and chilled meats from Britain would continue past their expiry date.
Lord Frost has also proposed removing checks and restrictions on British goods entering Northern Ireland that are not at risk of crossing into the Single Market, while removing the flow of medicines from the protocol.
Another proposal would end the European Court of Justice’s role in disputes relating to Northern Ireland, which continues to follow EU rules under the agreement.