Brexit trade talks have plunged into crisis after Britain warned the European Union that it could effectively override the divorce deal it signed unless the bloc agrees to a free trade deal by October 15.

Britain is reportedly planning new legislation that will override key parts of the Brexit Withdrawal Agreement – a step that, if implemented, could jeopardise a treaty signed in January and stoke tension in Northern Ireland.

Sections of the internal market bill, due to be published on Wednesday, are expected to “eliminate the legal force of parts of the withdrawal agreement” in areas including state aid and Northern Ireland customs, the Financial Times said, citing three people familiar with the plans.

Britain has set a deadline of October 15 to strike a free-trade deal with the European Union, and if none is agreed both sides should “accept that and move on,” Prime Minister Boris Johnson will say on Monday.

The next round of Brexit trade talks kicks off in London, and it seems Boris Johnson is already preparing fall-back options in case of failure https://t.co/nhtlprHQmM

— Bloomberg UK (@BloombergUK) September 7, 2020

Mr Johnson will say there is no sense in thinking about timelines beyond October 15.

“If we can’t agree by then, then I do not see that there will be a free trade agreement between us, and we should both accept that and move on,” he will say, according to comments released by his office.

Britain left the EU on January 31, but talks aimed at clinching a new trade deal before the end of a status-quo transition arrangement in December have so far snagged on state aid rules and fishing.

Without a deal, nearly $US1 trillion in trade between Britain and the EU could be thrown into uncertainty.

The reported plan to undermine the Withdrawal Agreement elicited surprise in Brussels.

“If the UK chose not to respect its international obligations, it would undermine its international standing,” said one EU diplomat.

-AAP