David Davis has ruled out the so-called Norway option during the transitional period after the UK leaves the EU, describing it as the "worst of all outcomes".
That means Britain will not join the likes of Switzerland and Iceland in the European Free Trade Association, in what had been seen as a possible solution to the challenges of having a trade deal from March 2019.
The Brexit secretary said: "The simple truth is membership of EFTA would keep us within the acquis [EU law] and it would keep us within requirements for free movement, albeit with some limitations, but none of those have worked so far. So in many ways it’s the worst of all outcomes.
"We did consider it, I gave it some considerable thought, maybe as an interim measure. But it seemed to me to be more complicated, more difficult and less beneficial."
Davis, who was speaking ahead of a critical second reading of the government's Repeal Bill, said the government was looking into whether it would need to formally confirm its departure from the European Economic Area. He said the EEA agreement would no longer apply to the UK after Brexit, but that a more formal departure might be necessary.
And he refused to rule out whether the UK would continue paying into the EU budget during the transition period. The divorce bill has been a major sticking point in talks with his counterparts in Brussels so far.
Davis also indicated that his team at the Department for Exiting the European Union "may well seek a customs agreement for that period and a similar arrangement on the single market provisions" during the transition period, although he acknowledged that was a matter for negotiation.