Iain Duncan Smith has dismissed George Osborne's warnings against a "hard Brexit" in the latest sign of Tory splits over how to quit the European Union.

Ahead of the party's annual conference, Mr Duncan Smith rejected the former chancellor's argument that Britain must compromise with the EU in order to get a Brexit deal acceptable to the "liberal mainstream majority".

The ex-Tory leader instead insisted that "the British people voted to take back control of their borders, their money and their laws; that seems pretty mainstream to me".

Read more: Nicola Sturgeon insists there is no mandate for a hard Brexit

Mr Osborne last week criticised the "take it or leave it bravado" of some so-called "hard Brexiteers" and insisted Britain would have to compromise and incur some of the "costs and obligations" of EU membership if it wanted to retain the benefits.

At a speech in Chicago, he added: "Brexit won a majority. Hard Brexit did not. The mainstream majority in our country do not want to be governed from the extremes."

Mr Duncan Smith, who had several clashes with Mr Osborne and the Treasury while serving as work and pensions secretary, dismissed the ex-chancellor's assessment.

Writing for the ConservativeHome website, he said: "We had the former chancellor, (ensconced in the aptly named 'windy city'), telling the Prime Minister that, despite his losing the referendum, he now has inside knowledge of what the British people voted for.

Read more: Nicola Sturgeon insists there is no mandate for a hard Brexit

"He went on as the representative of the liberal mainstream majority (and, it appears, as their spokesman) to warn Theresa May, in terms redolent of Project Fear, that she shouldn't govern from the extremes.

"Humility, it seems, can take many forms - though apparently not if one is mainstream, liberal or in the majority.

"Still, it is always good to know that someone out there is sticking to the plan."

The internal Tory battle over how to deliver Brexit could reach a fever pitch at the party's conference, which begins on Sunday.

Several former frontbenchers, such as Owen Paterson and Sir Gerald Howarth, have joined groups calling for a "hard Brexit" which could support pulling out of the European single market in order to retain control over immigration, a trade-off EU leaders are currently insisting on.

Others, such as Dominic Grieve and Anna Soubry, have joined pro-single market organisations to campaign for Britain to stay in the free trade zone.

Meanwhile, the likes of Mr Duncan Smith will be cheered by the assessment of a leading German businessman that Brexit could leave the country better off than its EU partners.

Read more: Nicola Sturgeon insists there is no mandate for a hard Brexit

Mathias Doepfner, chief executive of publishing giant Axel Springer, said he could see the UK adopting a "more free market-oriented model" which could be a "highly attractive" alternative to the EU economy.

He told the Financial Times that Britain was bound to experience short-term pain as a consequence of its June 23 vote to quit the EU, "but in three to five years from now, my bet would be that England will be better off than continental Europe".

Elsewhere, International Trade Secretary Liam Fox said Britain would leave "no legal vacuum" after Brexit in terms of its trade relationship with the world.

In a speech at the World Trade Organisation (WTO) in Geneva, he said: "The UK is a full and founding member of the WTO.

"We have our own schedules that we currently share with the rest of EU. These set out our national commitments in the international trading system.

"The UK will continue to uphold these commitments when we leave the European Union.

"There will be no legal vacuum but this will not stop us pursuing a more liberalised trade agenda in the future."