Theresa May and her bitterly divided cabinet will meet for five hours of crisis talks in a desperate attempt to salvage her EU withdrawal agreement after MPs rejected four variations of a "soft Brexit".
With options including no deal, a general election and a second referendum on the table, ministers will hold a three-hour "political cabinet" without civil servants present and then discuss government business for a further two hours.
According to The Times, Philip Hammond, the chancellor, will tell the cabinet the government has to make its own compromise proposal or admit parliament has failed "and put it back to the people in a referendum" since the party and the country cannot afford an election.
Mr Hammond said on Sophy Ridge on Sunday on Sky News last month that a second referendum was a "perfectly coherent proposition" that "deserves to be considered".
There is also speculation that Mrs May could bring back a vote on her deal to the Commons for a fourth time and link it with a confidence motion in the government, which many MPs believe would be a kamikaze move.
Kate McCann analysis the latest Brexit comings and goings in the Commons
Brexiteers Andrea Leadsom and Liam Fox are adamant that a no-deal exit would be preferable to a customs union and claim the support of more than half of Tory MPs, many of whom signed a letter to the PM.
The Home Secretary, Sajid Javid, a likely leadership contender to succeed Mrs May, has tweeted that a customs union might appear to be "some kind of soft comfort blanket", but was "in reality more of a straitjacket".
However, pro-Remain ministers including Amber Rudd and David Gauke, are determined to avoid a no-deal Brexit, and want Mrs May to seek a cross-party consensus.
Sky analysis finds populists could dominated the EU legislature after the May elections, threatening the progress of the project
The marathon cabinet showdown comes after another fraught day of Brexit debates in the Commons which ended with former minister Nick Boles, who proposed one of the four motions rejected, dramatically quitting as a Tory MP.
His voice trembling with emotion, Mr Boles told MPs: "I have given everything to an attempt to find a compromise that can take this country out of the European Union while maintaining our economic strength and our political cohesion.
"I accept I have failed. I have failed chiefly because my party refuses to compromise. I regret therefore to announce I can no longer sit for this party."
As Opposition MPs burst into applause, Mr Boles turned on his heels and walked out of the Commons chamber, prompting another Tory MP, Huw Merriman, to shout out to him: "Don't go, Nick!"
Seconds earlier, the Brexit Secretary Steve Barclay told MPs the cabinet would meet in the morning to consider the results of the votes and how the government should proceed.
"The government continues to believe that the best course of action is to do so as soon as possible," said Mr Barclay. "If the House were to agree a deal this week it may still be possible to avoid holding European Parliamentary elections.
The Labour leader Jeremy Corbyn called for a repeat of the debate on the four options defeated by MPs: a customs union, a Common Market 2.0, a confirmatory public vote and revoking Article 50.
"If it is good enough for the Prime Minister to have three chances at her deal then I suggest that possibly the House should have a chance to consider again the options that we had before us today, in a debate on Wednesday, so that the House can succeed where the Prime Minister has failed, in presenting a credible economic relationship with Europe for the future that prevents us crashing out with no deal," he said.
Ahead of the Cabinet meeting, former Tory leader William Hague claims the Conservative Party is in a "much worse" state than it was before Labour trounced it in 1997 and it risks becoming "a ruin" if Mrs May calls an election.
Writing in The Daily Telegraph, Lord Hague says there is an "immense danger" an election would tear the party apart, voters are much less loyal to parties than they were 20 years ago and could "switch rapidly to new brands" with more attractive policies on Brexit.
After the latest Commons votes, behind the scenes there were bitter recriminations, with MPs of rival parties blaming each other for the failure of any of the four motions to be win a majority.
Labour MPs were furious with SNP MPs, the independents and the Liberal Democrats for failing to back the customs union proposal spearheaded by Tory grandee and Father of the House Kenneth Clarke.
Pro-Remain MPs of all parties were angry that only 37 Tory MPs voted for Mr Clarke's customs union proposal and only 33 for Mr Boles' Common Market 2.0.
The 37 Tories backing a customs union included high-profile ministers Robert Buckland, Rory Stewart, Sir Alan Duncan, Tobias Ellwood and Margot James, however.
Pro-Remain Labour MPs were incensed as Mr Corbyn's Shadow Cabinet allies Ian Lavery and Jon Trickett failed to vote for party policy and back a confirmatory referendum.
Only 15 Conservative MPs voted for a confirmatory referendum, with 253 against, in what supporters of the move claimed was an aggressive whipping operation by the government.
But 10 Tories - Guto Bebb, Nick Boles, Ken Clarke, Mark Field, Justine Greening, Dominic Grieve, Richard Harrington, Phillip Lee, Antoinette Sandbach and Ed Vaizey - voted to revoke Article 50.