(Adds new information pars 10-19)
Theresa May will hold Brexit talks in Brussels on Saturday, just hours before a special summit is scheduled to sign off on the EU withdrawal agreement.
The Prime Minister announced the surprise move after a meeting with European Commission president Jean-Claude Juncker in Belgium.
Mrs May said: “We have had a very good meeting this evening.
“We have made further progress. And, as a result we have given sufficient direction to our negotiators, I hope, for them to be able to resolve the remaining issues.
“And that work will start immediately.
“I now plan to return for further meetings, including with President Juncker on Saturday to discuss how we can bring to a conclusion this process and bring it to a conclusion in the interests of all our people.”
The remarks came after suggestions from Brussels that the summit set to approve the draft withdrawal agreement on Sunday could be called off unless progress is made on finalising a political declaration on future relations, with one senior official saying: “We’re not there yet.”
Reports suggested that Germany’s ambassador to the EU had said the document must be finalised by Thursday or Chancellor Angela Merkel would not attend.
Asked whether the UK expected the summit to go ahead, the PM’s official spokesman said only: “A summit has been called, an agenda has been published and we look forward to attending.”
As talks went down to the wire, Chancellor Philip Hammond said that if the Brexit deal is rejected by Parliament it would unleash ‘political chaos’ and could lead to EU withdrawal not happening.
He told ITV’s Peston: “It’s clear that if the deal is not approved by Parliament we will have a politically chaotic situation.
“And, we don’t know what the outcome of that will be.
“And for those who are passionately committed to ensuring that we leave the EU on the 29th of March, 2019, one of the things that they are going to have to bear in mind is the possibility that in that chaos that would ensue there may be no Brexit.”
He added: “It could be no deal, but it could be no Brexit, we just don’t know.
“When we look at the economy, and the operation of the economy, getting a smooth exit from the European Union, doing this in an orderly fashion, is worth tens of billions of pounds to our economy.”
In other obstacles for Mrs May, Spain has raised concerns about the treatment of Gibraltar in the proposed text, while France is understood to be pushing for better rights of access to UK fishing waters.
Spanish Prime Minister Pedro Sanchez said his government is “annoyed” that the divorce agreement being prepared for Britain’s exit from the European Union doesn’t specify that Gibraltar’s future must be decided directly by officials in Madrid and London.
Mr Sanchez said the issue is a bilateral matter and is “essential” for Spain.
He repeated his threat that Spain will vote against the planned agreement unless its interests are taken into account.
And Mrs Merkel set her face against Tory backbench demands for Britain to have the unilateral power to tear up a proposed “backstop” arrangement for the Irish border.
Mrs Merkel told the German Parliament: “We have placed value, and I think this is right, on the fact that Britain cannot decide unilaterally when it ends the state of the customs union, but that Britain must decide this together with the EU.”
Commission vice-president Valdis Dombrovskis said that for Sunday’s summit to go ahead, “we will need to have agreed beforehand the political declaration on the future relationship and we are not there yet”.
He added: “Sherpas are due to meet on Friday. They will need to see a final text before then, and the Commission stands ready to consider the text and take any action at any time.”
Since unveiling her draft agreement last week, the PM has repeatedly warned MPs that failure to approve it would risk a no-deal Brexit, or no Brexit at all.
But answering questions in the Commons on Wednesday, she told MPs that the alternative to her deal “will either be more uncertainty, more division, or it could risk no Brexit at all”.
Work and Pensions Secretary Amber Rudd told BBC Radio 4’s Today programme: “It is my view that the House of Commons will stop no-deal.
“There isn’t a majority in the House of Commons to allow that to take place.”
The minister, a former Remain campaigner who replaced Leave-backing Esther McVey in the Cabinet following her resignation last week, said she expected MPs to back Mrs May’s plan after peering into the “abyss” and pulling back.
But she added: “If it doesn’t get through, anything could happen.
“The Brexiteers may lose their Brexit.”