Theresa May said the UK would only pay a multibillion Brexit bill in full if it manages to secure a suitable divorce deal with the EU.
The Prime Minister hailed a breakthrough on preliminary issues last week which means they start the next stage of talks on an exit agreement and a post-Brexit trade deal.
She told MPs there was "new sense of optimism now in the talks" and she was looking forward to agreeing the terms of a "deep and special partnership" with Europe into the future.
But she stressed that "nothing is agreed until everything is agreed" and UK concessions so far depend on reaching a final settlement.
She told the House that the UK's agreement to pay a Brexit bill of between £35-£39 billion is "off the table" if both sides do not agree on a final exit and trade deal.
In her speech, Mrs May acknowledged there had been "tortuous negotiations" during the first phase and "some doubted" that a deal would ever be reached.
She said: "The process ahead will not be easy. The progress so far has required give and take for the UK and the EU to move forwards together, and that is what we have done.
"Of course, nothing is agreed until everything is agreed.
"But there is, I believe, a new sense of optimism now in the talks and I fully hope and expect that we will confirm the arrangements I have set out today in the European Council later this week.
"This is good news for the people who voted leave who were worried that we were so bogged down in the negotiations, tortuous negotiations, that it was never going to happen.
"It's good news for people who voted remain, who were worried we were going to crash out without a deal.
"We are going to leave, but we are going to do so in a smooth and orderly way, securing a new deep and special partnership with our friends, while taking back control of our borders, money and laws once again."
Mrs May was attacked for “shambolic negotiations” and "wasted time" by Jeremy Corbyn.
He said she had only "scraped through" the talks on initial agreements.
The Labour leader also accused cabinet members of contradicting each other - and sometimes even themselves - over exactly what the UK was aiming for in the first phase of talks.
"I hope he next crucial phase of negotiations are not punctuated by the posturing, delays and disarray that have characterised the first phase," he told her.
The Prime Minister also faced jeering as she told MPs that the European Court of Justice would continue to have some jurisdiction in the UK courts for eight years after Brexit.