A No 10 source says a Brexit deal is "essentially impossible" after a call between the PM and Angela Merkel, APA reports citing BBC.
Boris Johnson spoke to the German chancellor earlier about the proposals he put forward to the EU - but the source said she made clear a deal based on them was "overwhelmingly unlikely".
They also claimed she said a deal would never be possible unless Northern Ireland stayed in a customs union.
But Labour called it a "cynical attempt to sabotage the negotiations".
Shadow Brexit secretary Sir Keir Starmer said Mr Johnson "will never take responsibility for his own failure to put forward a credible deal", and called on Parliament to "unite prevent this reckless government crashing us out of the EU".