Rishi Sunak has offered to sacrifice some of Britain's Brexit freedoms in a bid to restore devolved government in Northern Ireland.
The Prime Minister has promised to introduce a requirement that all new laws are vetted to ensure they will not create additional barriers to trade in the Irish Sea.
Downing Street hopes the pledge will convince the Democratic Unionist Party (DUP) to end its two-year boycott of Stormont, which has paralyzed Northern Irish politics.
But the offer angered Tory MPs, who warned that introducing such a policy would make it almost impossible for Britain to diverge from EU rules.
Eurosceptic sources said the plan would mean any laws designed to take advantage of Brexit freedoms would be at risk of being blocked by Whitehall officials.
Any legislation would have to be accompanied by a ministerial statement confirming that it would not have a "significant adverse impact" on internal UK trade.
The planned system would mirror the system used to screen new bills for their compatibility with the European Convention on Human Rights.
Northern Ireland effectively remained within the European single market when the rest of Britain left the bloc, to avoid the need for a hard border with the Republic.
As a result, goods traveling from Britain to Ulster must pass customs checks to ensure they are not destined for Ireland, a member of the EU.
If Britain deviates from EU rules, the number of checks needed on British goods crossing the Brexit border into Northern Ireland could increase, which critics say will hurt trade.
It raises the prospect that new laws that would see Britain diverge from Brussels could be blocked.
Unionists are angry about the current arrangement, which they say has damaged Northern Ireland's economy and turned the people of Britain into "second-class" citizens.
The DUP walked out of the Belfast meeting in February 2022 in protest over the Irish Sea border and refused to return until the checks were scrapped.
Mr Sunak renegotiated the original Brexit deal last year and replaced it with the Windsor Framework, which reduced - but not eliminated - customs administration.
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Unionists have pressured the Prime Minister to go further, but this would anger the EU and jeopardize the wider Brexit trade deal.
His latest offer would give the DUP an effective guarantee that Britain will not pass laws in the future that would create further trade barriers between Britain and Northern Ireland.
But Tory MPs warned this would come at the cost of binding Britain to European standards and investing in Brexit freedoms.
Sir Jacob Rees-Mogg, the former business secretary, said: "This means we will have no difference of opinion at all, and will ultimately have ended up with Theresa May's Checkers deal in all but name.
"I voted against the Windsor Framework because it subordinates part of Britain to the EU. This mechanism would restore some of the EU hegemony over us."
Sir Iain Duncan Smith, a former Tory leader, added that the plan was "a real problem".
He added: "The Windsor framework is the backdoor for the EU sticking to Britain and stopping us from falling apart. It needs to be replaced."
Sir Iain has called for Britain to relax rules on growing genetically modified crops, which would be a big boost for British farmers.
But the practice has been banned by the EU, meaning Northern Ireland cannot implement it or import such products from Britain.
A Eurosceptic source said: "It will be a powerful tool in the hands of officials, which will have a chilling effect where any disagreement will be seen as impossible."
Sir Jeffrey Donaldson, the DUP leader, has been in talks with the government for months about a deal to return to power-sharing at Stormont.
Ministers have offered legislation guaranteeing Northern Ireland's place in Britain, a new East-West council on internal trade relations and £3.3 billion in funding.
There were hopes he would back the deal at a party meeting last week, but the offer was met with fierce resistance from some senior DUP members.
He told the House of Commons on Wednesday that he had been threatened for trying to find a deal on the Irish Sea border issue, but vowed not to be intimidated.
The government has come under fire for 'failing' to capitalize on Brexit by quietly expanding the influence of EU law on the UK economy.
That criticism coincided with the Ministry of Economic Affairs making an announcement that it will expand the use of European safety marks.
'Listen to the business community'
Kevin Hollinrake, the business minister, said the bloc's 'CE' stamp, which represents goods made to EU standards, would now be accepted on more goods.
This move means that British manufacturers of electronics, such as vacuum cleaners, heat pumps and refrigerators, will be incentivized to continue to follow Brussels rules.
In a written statement, Mr Hollinrake said he has "listened to the business community" both in Britain and on the continent who want to continue following EU standards.
But Eurosceptic MPs fear the latest climb down will effectively end hopes that Britain will abuse its Brexit freedoms by diverging from the EU.
David Jones, vice-chairman of the European Research Group, said ministers should "encourage and accelerate the development of UK standards and not continue to stick to EU regulations".
He added: "The UK is pursuing a global trade policy and EU standards are becoming increasingly irrelevant. Holding on to the CE marking is extremely shortsighted."
Sir Bill Cash, a leading Tory Eurosceptic, warned that the government is "losing the opportunity" to break away from Brussels red tape.
In a letter to Kemi Badenoch, the business secretary, he said there is "little hard evidence" that ministers have a plan to pursue Brexit freedoms.
Asked about Mr Sunak's offer, a UK government spokesman said: "We do not comment on speculation.
"We believe there is a strong basis for a restoration of power sharing, and we remain hopeful that this can be resolved quickly."
