Britain must be prepared to walk away from the EU and stop negotiations if European leaders do not agree to trade talks at a crucial summit on Thursday evening, senior figures behind the Leave campaign warned on Wednesday night.

In an open letter to the Prime Minister, four former Cabinet ministers, as well as MPs, business leaders and academics demanded she “formally declare” that Britain will leave the EU and conduct trade deals via the World Trade Organisation.

The warning from the Leave campaign comes after the EU talks became deadlocked and amid fears the beleaguered Prime Minister will be humiliated at a key summit of EU leaders in Brussels.

Sources in Brussels have told The Telegraph that EU leaders will tell Mrs May Britain must agree to pay some money into the EU budget until 2023, rather than 2021 under the current offer.