The UK has ruled out remaining in a customs union because it would limit Britain's ability to strike free trade deals, and insisted it can find "technical" solutions which avoid the need for a hard border between north and south Ireland.
Theresa May's plan to avoid a hard border in Ireland after Brexit has been roundly rejected by EU negotiators - fuelling calls for the United Kingdom to remain part of a customs union. The easiest way to accomplish that would be to keep Northern Ireland in the EU customs unions, however, this is unacceptable to hardline unionists in Theresa May's government.
In February, however, the European Union published a version which only included the third "backstop" option, which effectively draws a customs border down the Irish sea - something May said would be "unacceptable" to any British PM.
The development has put further pressure on the Prime Minister's plan to leave the customs union, which is also meeting resistance in both houses of Parliament.
The report was published as former United Kingdom ambassador to the EU Sir Ivan Rogers said the British government's hopes for a technological solution to the border issue were regarded as "a fantasy island unicorn model" in Europe.
Mrs May had previously set out the UK's customs policy in a speech last month.
But in February, the European Union published a version which only included the third "backstop" option, which effectively draws a customs border down the Irish Sea.
Speaking in London on Thursday, he suggested proposed economic solutions for avoiding a hard border were regarded as a non-starter because of the UK's decision to diverge from the European Union by leaving the single market.
LONDON - Theresa May's proposals for the Irish border after Brexit were reportedly "annihilated" by European negotiators this week, who said her plans were unworkable.
A Government spokesman said: "We have been clear that we will protect Northern Ireland's place in the United Kingdom internal market".
No 10 says it is confident a deal can be done to avoid a hard border on the island of Ireland after Brexit despite signs of an impasse over the issue.
The first was a "customs partnership", where the United Kingdom would collect duties on behalf of the EU for goods destined for the European Union.
Responding to the Telegraph report, former Treasury permanent secretary Lord Macpherson tweeted: "EU's position on Irish border so predictable".
The second proposal, and reportedly preferred choice for the United Kingdom negotiators, was described as a "highly streamlined customs arrangement" by May.
December's first-phase agreement - officially known as the Joint Report - contains the "backstop" option of continued regulatory alignment between Northern Ireland and the Republic of Ireland in many areas.