Theresa May orders Cabinet to 'hold our nerve' in wake of Brexit backlash

Theresa May has told her cabinet she's still confident of securing a divorce deal with the EU, but contingency planning will continue for a no-deal Brexit.

Prime Minister Theresa May has ordered her ministers to hold their nerve on Brexit. Source: AAP

British Prime Minister Theresa May has told her cabinet ministers to hold their nerve as Brexit negotiations hit a difficult stage in the wake of EU leaders' rejection of her plans.

As ministers gathered at 10 Downing Street on Monday, the prime minister said she remained confident of securing a withdrawal agreement with the EU, but the government would continue to plan for the possibility of no deal.

The meeting came as the Department for Exiting the EU (Dexeu) released guidance that warned UK businesses and households of possible disruption to flights and coach services to the continent in a no-deal Brexit.

Prime Minister Theresa May has ordered her ministers to hold their nerve on Brexit. Source: AAP

Meanwhile, hardline Brexiteers piled pressure on May to ditch her Chequers blueprint for leaving the EU.

A report by the Institute of Economic Affairs think tank called on the government to seek a "basic" free trade agreement for goods, similar to that between the EU and Canada, while pursuing "regulatory freedom and trade independence".

Jacob Rees-Mogg, who leads the influential Tory backbench European Research Group, said the report offered a "supercalifragilisticexpialidocious Canada" deal which the UK should seize.

"This is about how you can have a fantastic Brexit that sets us up for the next generation and ensures our prosperity," he said.

Former foreign secretary Boris Johnson endorsed the report as "a very good piece of work".

However a spokesman for May ruled out moving towards a Canada-style deal, warning it would not prevent a hard border with the Republic of Ireland.

Britain's former Foreign Secretary Boris Johnson continues to give Theresa May grief over Brexit. Source: AAP

May told the 10 Downing St cabinet meeting it had always been clear that negotiations would come to a critical stage.

"Now is the time to hold our nerve," she told ministers.

The prime minister said the government's White Paper remained the only plan on the table which achieves the goals of frictionless trade and an open border in Ireland.

She said she remained confident of securing a deal with the EU, but added that the government would continue to "sensibly" plan for no deal.