David Davis has admitted it is possible the UK will not reach a deal with the European Union over Brexit.
The Brexit minister said reaching a deal with the EU was the most likely outcome of the talks, but went on to say the British government was prepared for no deal with the bloc.
"Reaching a deal with the European Union is not only far and away the most likely outcome, it's also the best outcome for our country," Mr Davis said in a speech in London.
"I don't think it would be in the interest for either side for there to be no deal. But as a responsible government it is right that we make every plan for every eventuality."
Both sides have spoken of their frustration at a lack of progress in negotiations so far, although Mr Davis said the talks had made real and tangible progress.
Britain wants to move discussions on to the future trade relationship with the EU, which Brussels will not consider until London settles what it sees as past debts.
While Mr Davis said he was "unambiguously" seeking a deal, he said Britain was ready for talks to fail.
"Over the past year every department across Whitehall has been working at pace covering the whole range of scenarios," he said.
"These plans have been well developed, have been designed to provide the flexibility to respond to a negotiated agreement, as well as preparing us for the chance that we leave without a deal."
It comes amid reports Britain is planning to offer more money to settle its bill with the EU in the latest bid to unblock the stalled Brexit negotiations, on the condition the EU agrees to begin discussing a future free-trade deal.
The size of the bill, covering commitments Britain has made while an EU member, is a key sticking point in divorce talks.
Britain has previously offered about €20bn (£18bn), but the EU wants at least €60bn (£53bn).
It is understood Theresa May has cleared the way for Britain to pay £40bn, almost doubling the amount being offered to break the deadlock.
Theresa May's office declined to confirm the amount, but said "the UK and the EU should step forward together" to unblock the negotiations.
"It remains our position that nothing's agreed until everything's agreed in negotiations with the EU," the Prime Minister's office added.
