Theresa May is calling off the vote on her Brexit deal in the face of what had been expected to be a significant defeat at the hands of rebel MPs.

A Government source confirmed that the vote was being pulled, with the Prime Minister due to inform the House of Commons in an oral statement at 3.30pm.

News that the crucial “meaningful vote” was being postponed broke just moments after a Downing Street spokeswoman told Westminster reporters at a regular daily briefing that it would go ahead.

The pound fell sharply in response, shedding 0.5% versus the US dollar to stand at 1.26. Against the euro, the pound was 0.8% down at 1.10.

Mrs May was engaged in a conference call by telephone with her Cabinet ministers as the story broke.

There was no official confirmation from 10 Downing Street that the vote was being called off.

But a senior source said: “It’s being pulled.”

Mrs May later spoke by phone to Arlene Foster, leader of the Democratic Unionist Party, whose MPs prop up the minority Conservative administration but were threatening to vote against her deal.

Mrs Foster said: “My message was clear. The backstop must go. Too much time has been wasted. Need a better deal. Disappointed it has taken so long for Prime Minister to listen.”

The dramatic developments occurred as the European Court of Justice  ruled that Britain can unilaterally halt the Brexit process by revoking the Article 50 letter declaring its intention to leave the EU.

Mrs May’s hastily-arranged statement is widely expected to confirm that she intends to seek further concessions from Brussels to try to win over rebellious backbenchers.

Government minister Nadhim Zahawi said the Prime Minister “has listened to colleagues and will head to Brussels to push back on the backstop.”

But a spokeswoman for European Commission president Jean-Claude Juncker poured cold water on hopes of a renegotiation.

In a press briefing in Brussels, Mina Andreeva said: “As President Juncker said, this deal is the best and only deal possible.

“We will not renegotiate – our position has therefore not changed and as far as we are concerned the United Kingdom is leaving the European Union on March 29  2019.”

Irish premier Leo Varadkar ruled out reopening negotiations around the backstop, which is designed to keep the Irish border open following Brexit.

The Taoiseach said it was not possible to reopen any aspect of the Withdrawal Agreement without reopening all aspects of it.

Scottish First Minister Nicola Sturgeon accused Mrs May of “pathetic cowardice” and urged Labour to table a vote of no confidence in the Prime Minister, which she said the SNP would support.

In a message directed at Labour leader Jeremy Corbyn, Ms Sturgeon said: “If Labour, as official opposition, lodges a motion of no confidence in this incompetent Government tomorrow,  the SNP will support and we can then work together to give people the chance to stop Brexit in another vote.

“This shambles can’t go on – so how about it?”

Mr Corbyn said the UK no longer had a “functioning Government” and called on the PM to switch to his party’s plans for a “jobs-first deal”.

“We have known for at least two weeks that Theresa May’s worst-of-all-worlds deal was going to be rejected by Parliament because it is damaging for Britain,” said Mr Corbyn.

“Instead, she ploughed ahead when she should have gone back to Brussels to renegotiate or called an election so the public could elect a new government that could do so.”

Brexit
A demonstrator dressed as Theresa May sells Brexit Fudge in Old Palace Yard, Westminster.

Labour MP David Lammy,  a supporter of the Best for Britain campaign for a second referendum, said: “This is an unprecedented and historic humiliation for Theresa May.  This is recognition of what has been clear for months: there is no majority for her miserable Brexit deal in Parliament.

“It is impossible to deliver on the 2016 referendum result because it was based on false promises and fantasy. No negotiations in Brussels will change this fact.

“Our politics is now well and truly stuck. The way to unblock it is to go back to the public with a people’s vote, which will either offer a mandate for a specific form of Brexit, or to remain in the EU.”

Senior Cabinet Brexiteer Michael Gove told BBC Radio 4’s Today that  there was “no-one better placed” than Mrs May to get additional concessions in order to provide MPs with “reassurance that this is the right deal”.

But he said he was concerned that renegotiating the Withdrawal Agreement could lead to other EU countries changing it “in a way that may not necessarily be to our advantage”, adding: “By reopening it, there is a risk that we may not necessarily get everything that we wish for.”

As several senior members of the Cabinet were reported to be manoeuvring to replace Mrs May should the vote fail, Mr Gove said it was “extremely unlikely” that he would stand as a future Conservative Party leader.

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(PA Graphics)

Mrs May’s address to MPs is due to be followed by a statement from Leader of the Commons Andrea Leadsom setting out the revised timetable for parliamentary business over the coming days.

Brexit Secretary Stephen Barclay will then deliver a statement responding to the ECJ ruling on Article 50.