UK officials suggested establishing a single market for goods trade with the EU as part of the next phase of its Brexit reset, the BBC understands.
Industry figures briefed on the move said the idea has not been taken forward at this point, after EU scepticism, as attention focuses on the details of existing negotiations over food, farm and energy trade.
The move does show significant extra ambition for a closer post-Brexit economic relationship, ahead of a summit in the coming weeks.
For weeks Chancellor Rachel Reeves and Prime Minister Sir Keir Starmer have been publicly calling for a much closer economic relationship with the EU in the next phase of post-Brexit talks.
There has been little public detail of what that has meant beyond existing talks on single market treatment for the trade in food, farm products, electricity and emissions trading.
It has now emerged that UK officials suggested that the agenda for the next summit could be much more ambitious, with one option covering frictionless trade within a UK-EU single market for all goods.
A European Commission spokesperson declined to comment on the UK's proposal to the Guardian, which first reported the story, but said they "see scope to deepen" industrial defence cooperation, citing the UK's desire for talks on a Ukraine loan.
The government did not confirm the specifics of any conversations, but acknowledged that a range of options were put to the EU in recent months and conversations are ongoing.
British business groups have been briefed on the move and the EU's pushback that such an ambitious ask would not be negotiable with the government's existing red lines on, for example, freedom of movement.
Some ministers believe that significant recent changes in the US posture to Europe might lead to more flexible thinking in continental capitals about the opportunities of economic reintegration between the UK and EU.
A summit is expected in July.
In the recent King's Speech, the government announced a European Partnership Bill which will provide a method through which UK and EU law would be aligned in relevant sectors being negotiated, for example food trade. The government could also use this legal avenue to do the same in any other sector.
