The EU's chief negotiator Michel Barnier stressed the United Kingdom would have to come up with a proposal that satisfied its 27 nations that its single market would not be undermined and that there was a guarantee of no hard border in Ireland.
During the Brexit briefing, held weekly at Downing Street, senior ministers discussed proposals to ensure the United Kingdom is not indefinitely tied to the European Union via the Northern Ireland "backstop" arrangements.
"She said that while the United Kingdom should aim to secure a withdrawal agreement as soon as possible, this should not be done at any cost".
May said she would not agree a withdrawal "at any cost", and that it would depend on an "acceptable" framework for future relations in areas like trade and security, expected to be covered in a separate political declaration.
But the spokesman cautioned: "Don't be under any illusion, there remains a significant amount of work to do".
"I don't want to go into the details, we're willing to consider improvements to the backstop but we need to reach an agreement for this backstop and we need a genuine backstop, an operational backstop to the point".
In Ireland, Varadkar's openness to considering proposals for a review of the backstop, something that was communicated during a phone call with May on Monday, has been considered in some quarters to be a concession, even though he stated that "the outcome of any such review could not involve a unilateral decision to end the backstop".
The prime ministertold cabinet that they would have another meeting before any agreement was settled, with No 10 insiders concerned a deal should be agreed by the end of this month if it is to be voted on before the United Kingdom leaves the EU.
"We are still some way off on the backstop", said one source.
Expectations are rising that United Kingdom negotiator Olly Robbins will be pressing hard to finalise a deal in Brussels this week, to set the scene for a special Brexit summit later in the month to secure the approval of the leaders of the 27 remaining member states. The UK can not negotiate its own trade agreement while it is signed up the the customs union.
In response, Sir Jeffrey said Dublin's stance was making a no-deal Brexit likely.
"Looks like we're heading for no deal", he wrote on Twitter, adding: "Can't understand why Irish government seems so intent on this course".
'So, we think there's a deal to be had if they recognise that the deal is unacceptable to Parliament, I think that opens up a vista of the opportunity of the real negotiations'.
"European Union officials and diplomats cautioned against the optimism expressed by some about the imminence of a breakthrough, describing the chances of striking a deal that meets both sides needs as "50-50".
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