A transitional deal is expected to be completed within three years of the UK leaving the European Union, according to the Chancellor.
Philip Hammond said trade deals with third countries may not come into force during the period, but claimed there was a "broad consensus" treaty-based arrangements with the EU would be in force by the next scheduled general election in June 2022.
Mr Hammond said "many things will look similar" on the first day after leaving the bloc in March 2019, and hoped goods would flow across the border between the EU and Britain in "much the same way as they do now" during the transitional period.
He told BBC Radio 4's Today programme: "There will be a process between the date we leave the European Union and the date on which the new treaty-based arrangements between the UK and the European Union which we hope and expect to negotiate come into force."
Mr Hammond did not say how long it would take to put the "necessary arrangements in place", but said: "People have talked about a year, two years, maybe three years.
"I think there's a broad consensus that this process has to be completed by the scheduled time of the next General Election, which is in June 2022."
He said there was a "broad acceptance" among the Cabinet for a transitional period after March 2019, and told the programme he could "envisage" a situation immediately following Britain's departure "with many arrangements remaining very similar to how they were the day before we exited the European Union".
He added: "But over time, those arrangements moving steadily with the introduction of new processes and systems until we get to the new end state, the new normal, that will be our long-term relationship with the European Union."
The Chancellor said he recognised that it may "take some time" to "negotiate trade deals with third countries" following claims by former EU trade commissioner Karel De Gucht that the UK would not be able to strike a trade deal with the US before it has left the EU or during a transitional period.
Mr Hammond said: "We recognise that it will take some time for us to negotiate trade deals with third countries. The important point is that we are able to get started on that process and during a transition period when we would hope to have continued access to the European market.
"It may be that during that period we don't bring those agreements into force, but it will take us time anyway to negotiate them."
Immigration Minister Brandon Lewis said on Thursday that free movement of labour would end when Britain leaves the EU.
But Mr Hammond said there would be a registration system in place for people coming to work in the UK after Brexit, during the transitional period.
"If they come here to work after we leave the European Union, during that transitional period, the sensible approach will be to seek to register people so that we know who's coming and who's going," he said.
"This is a transitional period that will take us from membership of the European Union to a new future relationship with the European Union which has yet to be negotiated, so the details of our long-term relationship are a matter for the negotiations which David Davis is conducting in Brussels."
According to the Financial Times, Mr Hammond wants Britain to maintain full access to the European single market and customs union in the first of a two-part transitional deal after Brexit.
The Chancellor is said to have told business leaders he initially wants an "off-the-shelf" deal with the EU that would maintain the UK's current trading relationship with the bloc, followed by a second "implementation" phase while the final terms of a future trade deal were negotiated.
The EU said it was too soon to discuss details of any transitional arrangements before talks on the final deal had begun.
European Commission spokesman Alexander Winterstein said chief Brexit negotiator Michel Barnier's view was that "once you know where you are going, you can also consider the modalities of getting there".
"But one thing at a time. At this point in time we are about to discuss the specifics of separation and once this is done to the satisfaction of everyone, we may move to the second step," he added.
Labour MP Chuka Umunna, a leading supporter of the Open Britain group pushing for continued close ties to the EU, said: "It is refreshing to hear Government ministers facing up to the realities of Brexit at last by putting the country's economic interests at the forefront of these negotiations.
"Both the Chancellor and the Home Secretary have stated clearly this week that a disastrous cliff-edge Brexit must be avoided. British people and businesses will not accept unnecessary disruption to their day-to-day lives and livelihoods, just because of certain politicians' ideological commitment to a hard Brexit.
"Whilst the Chancellor and the Home Secretary have brought a welcome dose of reality to the Brexit debate, more clarity is still needed about how exactly they plan to avoid the cliff-edge of a hard Brexit, including the details of any transitional arrangement. The truth is, the only way to maintain stability for British people, British jobs and British businesses is to stay in the single market and the customs union."