Prime Minister Theresa May could bow to Parliamentary pressure to keep Britain in a customs union with the European Union after Brexit.
Following a defeat in the House of Lords and reports that a number of Conservative MPs will vote in favour of membership in the Commons, the Prime Minister and her team are reported to be having a rethink.
One senior Downing Street aide told the Sunday Times that in a meeting last month it was said that Mrs May and her top team "will not be crying into our beer" if Parliament forces the British government's hand on the issue.
Such a U-turn would be popular with business leaders and go a long way to resolving Mrs May's difficulties when it comes to the Northern Ireland border issue.
However, it would also be hugely controversial with senior members of the Cabinet, with Downing Street now believing International Trade Secretary Liam Fox and Foreign Secretary Boris Johnson could both resign.
Justice Secretary David Gauke, appearing on BBC's The Andrew Marr Show, insisted the Government needs to make the case to MPs for leaving the customs union as part of Brexit.
He said: "The job of those of us in Government is to persuade Parliament that the route going forward, leaving the customs union, but ensuring that we don't put in place unnecessary barriers to our trade with the European Union.
"We can make that case to Parliament. I think we can win that case. I think we have got to win that case and that is my determination."
Shadow foreign secretary Emily Thornberry, who also appeared on the programme, said that remaining in a customs union "makes sense".
She said: "I think anybody who has looked into this issue over the last year or so has seen that it is quite clear that there is no other place that we can go than to remain in a customs union with the European Union - nothing else makes sense.
"If we leave the European Union, we leave the customs union and we don't have anything to replace it with, we suddenly, when we leave, are going to have to make not just new deals with countries across the world for free trade but also all the other ones that Europe had made until that point."
A Downing Street source said Mrs May would continue to argue for Britain to leave the customs union, adding: "Government policy hasn't changed - we are leaving the customs union."