The PM will push for a general election if the EU proposes to delay Brexit until January, No 10 has indicated.
Boris Johnson « paused » his Brexit bill on Tuesday after MPs rejected his plan to get it signed off in three days.
Now EU leaders will consider whether to grant a delay to the 31 October Brexit deadline and what length it would be.
A letter Mr Johnson was forced by law to send to the bloc after failing to secure backing for his deal on Saturday calls for a three-month extension.
But a Downing Street source suggested the prime minister would not accept such a lengthy extension.
« On Saturday, Parliament asked for a delay until January and today Parliament blew its last chance, » the source said.
« If Parliament’s delay is agreed by Brussels, then the only way the country can move on is with an election. This Parliament is broken. »
- How would another Brexit delay work?
- How soon could there be a general election?
On Tuesday, MPs approved the prime minister’s Withdrawal Agreement Bill on its first hurdle through the Commons – called the second reading – by 329 votes to 299.
But minutes later Mr Johnson was defeated – by a majority of 14 – in a second vote on a fast-tracked timetable for the bill, prompting him to pause his legislation.
The prime minister insisted to MPs it was still his policy that the UK should leave the EU on Halloween, but acknowledged he would have wait to hear what EU leaders said.
However, Leader of the Commons Jacob Rees-Mogg said it was « very hard to see how it is possible » for the bill to pass through the Commons and the Lords before 31 October, adding that Brexit was now in « purgatory ».
Following the vote, EU Council President Donald Tusk said he would recommend European leaders backed an extension to the Brexit deadline, though he did not say what length it should be.
The BBC’s Europe editor Katya Adler said most of the people in EU circles she had spoken to were tempted to grant the extension to 31 January laid out in the so-called Benn Act – the law aimed at preventing no-deal.
Under that law, Mr Johnson wrote to the EU to ask for a three-month extension on Saturday, but did not sign the letter and said it was Parliament and not the government that had requested the delay.
However, BBC Brussels reporter Adam Fleming said an EU source had indicated the bloc was also considering a « flextension » – an extension with a maximum end date, but with the flexibility for the UK to leave early if a deal was ratified sooner.
For the prime minister – not that he would like to admit it – it is almost now impossible, even for an optimist like him, to imagine there is any remote possibility he will be able to stick to his Halloween deadline for Brexit to actually happen.
(There is one scenario where he could – if the EU turns down an extension – but that seems even less likely than Boris Johnson deciding he wants a quiet life, now the European Council President Donald Tusk said he would recommend another delay, even though we don’t know on what terms).
Political promises matter, especially one that was made repeatedly in such dramatic terms.
It is also true, however, that the prime minister achieved an important win on Tuesday night.
Read more from the BBC’s political editor.
Before Tuesday’s votes, Mr Johnson had threatened to pull the whole bill and call for a general election if the timetable motion was lost.
But the prime minister cannot force an election himself and would need the backing of Parliament.
Opposition MPs have previously ruled out holding a general election until the prospect of no-deal was off the table.
Tory Brexiteer Andrew Bridgen said he thought the EU would grant a three-month extension.
Speaking on BBC’s Newsnight, he said in such a scenario there would be « no excuses » for Labour leader Jeremy Corbyn not to back an election.
Following Tuesday’s votes, Mr Corbyn said his party was prepared to work with the government to agree « a reasonable timetable » to enable the Commons to debate and scrutinise the Brexit legislation properly.
« That would be the sensible way forward, and that’s the offer I make on behalf of the opposition tonight, » he said.
His offer potentially opens the way for Parliament to approve the bill before the end of the year.
But it also opens up increased opportunities for MPs to seek to amend the legislation in ways the government would find unacceptable – such as by including a customs union or second referendum.
What happens next?
If an election were to be triggered this week, the earliest it could take place would be Thursday 28 November, as the law requires 25 days between an election being called in Parliament and polling day.
MPs had been due to debate the bill over Wednesday and Thursday, but will now return to discussing the contents of the Queen’s Speech – which put forward the government’s domestic agenda for the new session of Parliament.
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