The EU is demanding the UK ditches plans to change Boris Johnson's Brexit deal "by the end of the month" or risk jeopardising trade talks, APA reports citing BBC.
The UK has published a bill to rewrite parts of the withdrawal agreement it signed in January.
The EU said this had "seriously damaged trust" and the EU would not be "shy" of using legal action against the UK.
But cabinet minister Michael Gove said the UK had made it "perfectly clear" it would not withdraw the bill.
The government says Parliament is sovereign and it can pass laws which breach the UK's international treaty obligations.
Meanwhile, trade talks between UK and EU officials continue in London.
The source of the EU's concern is Mr Johnson's proposed Internal Market Bill, which was published on Wednesday.
It addresses the Northern Ireland Protocol - an element of the withdrawal agreement designed to prevent a hard border returning to the island of Ireland.
The bill proposes no new checks on goods moving from Northern Ireland to Great Britain. It gives UK ministers powers to modify or "disapply" rules relating to the movement of goods that will come into force from 1 January, if the UK and EU are unable to strike a trade deal.
The publication of the bill prompted emergency talks between Cabinet Office minister Michael Gove and Maros Šefčovič, the European Commission Vice-President.