The former frontbencher and passionate Leave campaigner says the “vast majority” of his Conservative colleagues share his concerns over the divorce negotiations, and has warned Theresa May to to prepare for no deal.

The clock is ticking for the Prime Minister to reach an agreement with Brussels on key divorce issues ahead of a major EU summit later this month.

The PM and her team appeared to be on the verge of securing a deal yesterday, but a last-minute intervention by the Democratic Unionist Party (DUP) scuppered her plans.

But she is now being urged to “get on with other arrangements” if the EU refuses to play ball.

In an interview with the BBC’s political editor Laura Kussenberg, Mr Duncan Smith said the EU should “back off otherwise we get on with other arrangements which are not going to be beneficial to you”.

He said the task now was to convince the PM and Government they have the support of the Tory party, as well as the “country at large”.

He said: “We would rather have the trade deal but not at any price.

“Our intention is to be treated as equals, not as supplicants, and therefore we’ve given every assurance under the sun to the Irish, everybody knows that we’re not going to end up with a hard border in Ireland.

“We are never going to do it because Ireland has always had a special place for the UK.

“They know that, we know that, this is a game being played out over power, and the answer at the end boils down to who will call the shots on this.”

He added he had “made it pretty clear” to Number 10 he believed a point had been reached where “this set of demands are demands too far”.

Mrs May spent yesterday in Brussels to iron out differences on key divorce issues: the divorce bill, EU citizens’ rights post-Brexit and the Northern Ireland border. 

The first two appear to have been settled, with the Government reportedly preparing to offer some €50billion for a free trade agreement and both sides prepared to protect the rights of citizens after the UK leaves the bloc.

However the Irish border issue has proved a major sticking point, with the DUP objecting to the Government’s plans.

The party’s leader Arlene Foster said yesterday she would not accept any arrangement which would see Northern Ireland leave the EU on different terms to the rest of the UK.

Mrs Foster issued a furious response after leaked reports from the negotiations in Brussels indicated the Government and EU - including the Republic of Ireland - were preparing to sign off an agreement which would see “regulatory alignment” across the whole island of Ireland. 

Clarifying her position today, the DUP leader said her strongly worded response was issued because her party had not seen the final agreement “until later on”.

She acknowledged there may have been good reasons for holding the draft text back, but insisted her priority was for Northern Ireland to remain part of the UK. 

She said: “We want to see progress, we don’t want to see a hard border, we want to have good relations with our next door neighbours in the Republic of Ireland but we are not going to cut ourselves off from the rest of the United Kingdom.”

Mrs May could return to Brussels as soon as tomorrow to resume talks.