EU officials have proposed a compromise Irish border backstop plan in a bid to break the deadlock in the Brexit negotiations.
Diplomats have floated fresh proposals, under which Great Britain and Northern Ireland would remain a single customs territory under World Trade Organization rules and still be linked in a customs union with Ireland and the rest of the EU.
The UK mainland could apply different trade rules without breaking WTO regulations, diplomats told Reuters.
Earlier this month Theresa May rejected a draft deal negotiated by UK and EU officials for Britain to remain part of the EU customs union for the foreseeable future.
Since Downing Street's rejection negotiations have intensified in a bid to resolve the ongoing issue impeding the Brexit deal.
The EU compromise would placate Ireland and Northern Ireland, both against a hard border and gives the UK more guarantees around remaining in the customs unions.
It is also designed to satisfy Brexit supporters, who wants UK to be able to do its own trade deals.
It is believed to be broadly similar to the deal rejected by Downing Street but the original deal proposed keeping Northern Ireland alone under EU customs rules to avoid disrupting the peace with barriers and checks.
Brussels' offer for the UK as a whole to remain in a customs union was unpopular with Brexit supporters and ruled out by May before negotiations began.