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The admission was made after it emerged that a new customs plan could take 18 months longer to implement than initially planned.
The revelations are in contrast to comments made on Tuesday by the Home Secretary Sajid Javid, when he said that there would be a “complete, total end to freedom of movement” after Britain’s departure from the European Union.
Speaking to the Home Affairs Committee, Mr Javid, said: “There will be no automatic right for anyone from the EU, or anywhere else in the world, to make a unilateral decision to hop on a plane and come to work in the UK.
“Freedom of movement as we understand it today will end, but also there will be no version of that, no derivative of that, no type of free movement, no backdoor version of free movement.
However, in private senior government figures said “it will be just like any other free trade deal” and the UK will offer work visas to the EU as part of negotiations, according to The Times.
Downing Street have been told Mrs May’s new customs plan won’t be fully ready for up to 18 months and have been warned some businesses won’t have purchased the required technology for when the future customs arrangement are enforced on January 1, 2021.
The advantages of the new arrangement may be postponed until the summer of 2022 to provide businesses with more time to adapt to the changes, while the events have hindered Ms May’s plans for a soft Brexit.
However, the delay is unlikely to affect as much as 96 per cent of all businesses, according to those close to Government.
Prime Minister Theresa May reaffirmed her commitment to ending free movement after her meeting at Chequers.
Ms May vowed to “take back control of our borders”. However, the document agreed by the Cabinet included the possibility of a “labour mobility scheme”.
If a labour mobility scheme is implemented, it could allow EU citizens to work in Britain and may provide them with preferential treatment.
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