OWEN Smith, who challenged Jeremy Corbyn for the Labour leadership, has signalled that he could quit the party over its official Brexit position and suggested others might follow suit.

The MP for Pontypridd’s warning came after the Labour leader wrote to Theresa May, setting out five demands that needed to be met to get his party's support for a "sensible" Brexit deal.

The demands are:

*a permanent customs union to deliver frictionless trade and help avoid a hard border on the island of Ireland;

*close alignment with the single market, including shared institutions and obligations;

*alignment on rights and protections so that UK standards keep pace with those across Europe as a minimum;

*participation in EU agencies and funding programmes and

*unambiguous agreements on the detail of future security arrangements, including access to the European Arrest Warrant and vital shared databases.

The five demands appear to shift Labour away from its original six tests, which referred to delivery of the “exact same benefits” the UK enjoyed as a member of the EU, fair management of migration and delivery for the nations and regions of the UK.

The Labour leader’s letter also made no mention of a second EU referendum but Sir Keir Starmer, the Shadow Brexit Secretary, insisted the five demands did not mean the option of a People’s Vote was being taken off the table.

However, Mr Smith, who stood against Mr Corbyn in 2016, said he was now considering his position.

“It's something that I and lots of other people are considering right now," he told BBC Radio 5 Live.

"At the moment I may be asked by the Labour Party to row in behind a policy decision that they know, and the Government knows, is going to make the people I represent poorer and - more fundamentally actually - is at odds with the internationalist, social democratic values I believe in," declared the backbencher.

His colleague Chuka Umunna, a prominent pro-EU MP, said Labour’s new position was "totally demoralising".

The London MP explained: "This is not Opposition, it is the facilitation of a deal which will make this country poorer."

He added: "I hate to think what all those young voters who flocked to the party for the first time in 2017 will make of this. Vote Labour, get a Tory Brexit. They will feel they have been sold down the river."

Chris Leslie, the former Shadow Chancellor, also attacked Mr Corbyn's move, claiming it had put "Labour's conference policy in the bin" and warned his party leader would have to "share responsibility" when jobs were lost as a result of Brexit.

At the weekend, there were reports that “at least” six Labour MPs, disillusioned by the party’s Brexit policy, were preparing to quit the party and form a centre group. Sir Vince Cable, the Liberal Democrat leader, claimed there was a “real chance of a significant group” of Labour MPs breaking away from their party and, if that happened, the Liberal Democrats “will work with them in some form”.

However, Barry Gardiner, the Shadow International Trade Secretary, defended Labour’s apparent shift in policy away from its original six tests, saying the offer to Mrs May was made "in a spirit of co-operation and compromise".

He told BBC Radio 4’s Today programme: “It's not about tests now. What we are doing is saying we believe that these are the options that are available that would actually secure a majority in the House of Commons."

Sir Keir said the letter "sets out in robust terms that the Prime Minister must abandon her Brexit red lines".

He stressed: "It does not take the option of a public vote off the table."

But Matthew Pennycook, a member of Sir Keir's frontbench shadow Brexit team, said if Mrs May did not accept Labour's terms, then "we must move to support a public vote".

The Greenwich MP said there were "no other credible options left" to prevent a no-deal Brexit.

Meanwhile, Downing Street confirmed that Mr Corbyn's letter had been received and a reply would be given in due course. A spokeswoman noted: "Our positions on many of the issues in the letter are well known. Our position on the backstop has not changed."

She said no further meeting between Mrs May and the Labour leader to discuss Brexit had been scheduled but made clear "her door is open".

Earlier, David Lidington, the PM’s de facto deputy, said the Labour plan for a customs union with a say in EU trade deals was "wishful thinking".

In Brussels, a European Commission spokesman declined to discuss Mr Corbyn's proposals, saying only: "Our interlocutor is Her Majesty's Government and the Prime Minister."

On Wednesday, Donald Tusk, the European Commission President, highlighted the Labour leader’s "pro-Brexit stance" and said: "There is no political force and no effective leadership for Remain."