Boris Johnson has insisted no Prime Minister could accept terms from the EU ahead of showdown talks in Brussels.
Mr Johnson struck a bullish tone at Prime Minister's Questions as he prepared to make an eleventh hour dash to the Belgian capital to meet EU Commission boss Ursula von der Leyen on Wednesday night.
As the threat of a no-deal Brexit loomed large, Mr Johnson insisted a deal was "there to be done".
But he told MPs: "Our friends in the EU are currently insisting that if they pass a new law in the future with which we in this country do not comply or don't follow suit, then they want the automatic right to punish us and to retaliate.
"Secondly, they are saying that the UK should be the only country in the world not to have sovereign control over its fishing waters.
"I don't believe that those are terms that any prime minister of this country should accept."
Keir Starmer said the British public would "pay the price" for a no-deal scenario and laid blame on the Prime Minister for a "total failure" of leadership.
Mr Starmer, who dialled from home where he was self-isolating, said: "Last September the Prime Minister actually hit the nail on the head when he said that leaving without a deal would be, in his words, 'a failure of statecraft'.
"It would. It would be a total failure and it would the British people who pay the price."
The Labour leader grilled Mr Johnson on gloomy forecast from the Office for Budget Responsibility that a no deal would result in higher unemployment, higher inflation and a smaller economy.
He also hinted that Labour could support a deal in the Commons - something it has so far refused to confirm.
Mr Starmer said: "The Prime Minister asked me how I'll vote on a deal that he hasn't even secured - secure the deal Prime Minister, you promised it.
"I'll say this - if there is a deal, and I hope there's a deal, then my party will vote in the national interest - not on party political lines, as he is doing."
He accused the PM on "dithering" over securing a deal that was good for the country and pleasing his hard Brexiteer backbenchers.
"I genuinely hope this is the usual Prime Minister's bluster and, like one of his newspaper columns, a deal arrives at the last minute," Mr Starmer said.
The Prime Minister hit back, saying he could not take Labour's criticisms seriously until it came up with a firm position.
"What I can say is that this country will be ready for whether we have a Canadian or an Australian solution, and there will be jobs created in this country, throughout the whole of the UK, not just in spite of Brexit but because of Brexit, because this country is going to become a magnet for overseas investment," he claimed.
Mr Starmer's spokesman gave strong hints that Labour would back a trade deal, telling reporters firmly that no-deal would not be in the national interest.
"On how we vote for a deal we can't set that out or confirm that until firstly the Government actually secures a deal and also until we know the terms of any vote," he said.
The spokesman added: "Keir has been clear that the national interest is to get a deal and that's what we expect the Government to deliver.
"No-deal would be absolutely catastrophic and would be catastrophic for people's jobs and for businesses, and as we go through the worst recession in 3-400 years the idea that any government in good conscience could think no-deal is a good idea is for the birds - and no-deal is not in the national interest."
The clash comes as the Prime Minister was due to have dinner with Ms von der Leyen after negotiators failed to break the deadlock on vital trade talks.
Brexit officially happened earlier this year but the UK and the EU agreed to a transition period, keeping the same rules in place until the end of December to give both sides time to hammer out a new trading relationship.
If a deal cannot be struck, the UK will have to revert to tariff-heavy World Trade Organisation rules - effectively a no-deal Brexit.
No10 said progress had to made at the dinner for post-Brexit trade negotiations to resume.
The Prime Minister's official spokesman said: "David Frost and his team yesterday took some time to prepare details of the areas where there are issues outstanding.
"It will be those main issues that are discussed tonight and then following that we will have to see how those talks go.
"If progress can be made at a political level this may allow Lord Frost and his negotiating team to resume talks in the coming days."
