Theresa May set out in her Florence speech a transition that ran for 'around two years - taking the transition until the spring of 2021.
But the EU has warned this would mean entering the next seven-year budget cycle and demanded an earlier end to transition.
Downing Street sources insisted today that the 'details of the implementation period are a matter for negotiation'.
The latest apparent climbdown came as Chancellor Philip Hammond launched a charm offensive in five European capitals and Foreign Secretary Boris Johnson prepared the first of a series of major Government speeches on the 'road to Brexit'.
Theresa May (pictured in Belfast last night) set out in her Florence speech a transition that ran for 'around two years - taking the transition until the spring of 2021 but it could now end in December 2020
The latest apparent climbdown came as Chancellor Philip Hammond (pictured in Davos last month) launched a charm offensive in five European capitals
A Whitehall source directly involved with the UK's exit planning told The Sun: 'The EU timetable is the working assumption and no one seems too upset by that.'
WHEN WILL BRITAIN BE OUT OF THE EU?
Britain triggered Article 50 on March 29, 2017, starting a two year process for leaving the EU:
March 2018: Transition deal due to be agreed, running for about two years
October 2018: Political agreement on the future partnership due to be agreed
Early 2019: Major votes in Westminster and Brussels to ratify the deal
March 29, 2019: Article 50 expires, Britain leaves the EU. Transition is expected to keep everything the same for about two years
December 31, 2020: Transition expected to come to an end and the new relationship - if it has been agreed - should kick in
The details of the transition period are currently the subject of detailed negotiations and a major row broke out last week between Brexit Secretary David Davis and EU negotiator Michel Barnier.
The goal is to agree a transition period by the time of an EU summit in March.
Britain hopes a whirlwind round of diplomacy, combined with a series of major speeches including two from Mrs May, will break the deadlock in its favour.
Mr Hammond will be in Norway and Sweden today, before travelling on to Amsterdam, Spain and Portugal later in the week.
The blizzard of diplomatic work comes amid claims Brussels is preparing to improve its Brexit trade offer amid disarray at Mr Barnier's hardline approach.
EU chiefs said there was pressure from EU capitals to scrap its chief negotiator's strategy.
The details of the transition period are currently the subject of detailed negotiations and a major row broke out last week between Brexit Secretary David Davis and EU negotiator Michel Barnier (pictured last week in Brussels)
They want to 'leave the door open' to Mrs May but only if she reveals what she wants from a future relationship.
EU diplomats and officials yesterday hinted Brussels was prepared to soften its stance.
It would see the bloc offering the UK a 'tailor-made' trade deal, rather than a deal similar to the EU and Canada's, which has been suggested and which Mrs May deems unacceptable.
A senior EU official told the Mail: 'Some member states are saying 'we can't prescribe what the UK should do', others are saying 'yes but we should leave the door open'.
Foreign Secretary Boris Johnson (pictured in Thailand yesterday) is preparing to give the first of a series of major Government speeches on the 'road to Brexit'