In a statement, European Commission President Ursula von der Leyen said the UK had been put on formal notice over the Internal Market Bill, which would override a part of the agreement when it came to goods and allow the country to modify or re-interpret "state aid" rules on subsidies for firms in Northern Ireland, in the event of the two sides not agreeing on a future trade deal.

She said the UK would have until the end of November to respond to the EU's concerns over the draft legislation, reports the BBC.

She the bill was a "full contradiction" of previous UK commitments over how a hard border on the island of Ireland should be avoided.

The EU had given UK Prime Minister Boris Johnson until the end of September to ditch the contentious clauses, but "the deadline had lapsed", von der Leyen was quoted as saying in a Guardian report.

"We had invited our British friends to remove the problematic parts of their draft internal market bill, by the end of September.

"This draft bill is, by its very nature, a breach of the obligation of good faith, laid down in the withdrawal agreement. Moreover, if adopted as is it will be in full contradiction to the protocol on Ireland and Northern Ireland.

"The problematic provisions have not been removed. Therefore this morning, the commission has decided to send a letter of formal notice to the UK government. This is the first step in an infringement procedure," she added in the statement.

Meanwhile, the UK said it would respond "in due course", the BBC reported.

A spokesperson for the Johnson government said the bill was a necessary "safety net" to protect trade between different parts of the UK.

Thursday's announcement came after Maros Sefcovic, Vice-President of the European Commission for Interinstitutional Relations said on Monday that the EU was mulling legal options if the UK breaches the Brexit deal.

The UK left the EU on January 31, having negotiated and signed the withdrawal agreement, which is now an international treaty, with the bloc, the BBC reported.

The two sides are now in the closing weeks of negotiations for a post-Brexit trade deal before the transition period ends on December 31.