The Chancellor has said there is a "credible case" for a referendum on any Brexit deal, and that it deserves to be tested in Parliament.
Speaking on ITV's Peston, Philip Hammond also said a long delay to Brexit is likely since the Government will do everything "in our power" to prevent no-deal, but once a deal is passed, the UK should be able to leave the EU, rather than wait until any agreed end-date.
Shortly after Mr Hammond's television appearance, MPs in the Commons voted to force the Prime Minister to further delay the date of Brexit - by just one vote - in a bid to avoid no-deal, making the Chancellor's predictions look more likely.
Speaking to ITV News Political Editor Robert Peston, Mr Hammond said a "confirmatory referendum" is a "perfectly credible" idea, unlike "some ideas" which had been put forward "which are not deliverable, they are not negotiable".
Mr Hammond had previously said that a second referendum “deserves to be considered”, but Wednesday's comments mark the first time a Cabinet minister has suggested testing support for one by politicians.
The MP for Runnymede and Weybridge told ITV News' Political Editor, that although many people would "disagree" with a referendum and that "it deserves to be tested in Parliament".
Also appearing on the political programme was Labour's deputy leader Tom Watson who reiterated his party's support for a second referendum on any potential Brexit deal.
Mr Hammond was also explicitly clear that he did not want to see a no-deal Brexit, and continued that it is an "expectation" that the European Union will offer a longer extension to the Article 50 process in a bid to avoid this.
However, the Tory MP continued that the Government would want to be able to bring any extension to an end as soon as possible after a Brexit deal is passed.
The Chancellor told Peston he wanted an "absolute clarity that as soon as we have done the deal we are able to bring that extension to an end".
"So it's less about the nominal length of time of the extension and more about the mechanism for bringing it to an end once the deal is done," he said.
The Chancellor added: "It's an expectation that ... whatever length of extension was agreed, if we got the deal done at an earlier point then it would be in everybody's interest that we moved into the implementation period at that point."
Mr Hammond told Peston that the Government did not want to see a no-deal Brexit as it would be a "threat to the union and a threat to our economy... jobs and businesses across the country".
Should no-deal occur, "some form of direct rule to create the powers that are necessary to manage the border [between Northern Ireland and the Republic] in the immediate aftermath" would be necessary, Mr Hammond said, and this would have "huge consequences for the future of the union", potentially leading to Northern Ireland seeking to join the Republic.
Addressing the cross-party talks held by Theresa May with Jeremy Corbyn in a bid to break the Commons impasse over Brexit, Mr Hammond said he hoped the two leaders would be able to discover whether there was a "landing zone" where both sides could meet on a deal.
"We are going to have further discussions tomorrow. I think both sides need to understand where each other are," he told Peston.
"But I would hope we can get, very quickly, to an understanding of whether there is a cross-party deal to be done."
To achieve such a deal both sides will have to "compromise", the Chancellor said, adding: "Both parties have to give something up, there has to be pain on both sides."
Number 10 described Wednesday's talks as "constructive, with both sides showing flexibility and a commitment to bring the current Brexit uncertainty to a close", while Mr Corbyn said "there hasn't been as much change as I expected but we are continuing to have some discussions tomorrow morning to explore some of the technical issues".
Signalling that compromise would be required from both sides in the talks with Labour, Mr Hammond was asked whether a customs union was a price worth paying for a deal.
"If that's what we have to do then let's look at that," he said.
Mr Hammond said that "some kind of customs arrangement is clearly going to be part of the future structure".
"When you enter into a negotiation like this to find a compromise way forward, both parties have to give something up.
"There is going to be pain on both sides."
However, prominent Brexiteer and European Research Group deputy chair Steve Baker said it was "very unlikely that a majority of Conservative MPs" would support a deal agreed with Labour which included some form of customs union as this would be "contrary" to the Party's manifesto.
Mr Baker demonstrated rising anger among Tory Brexiteers was increasing, telling Peston the leadership of the Conservative Party was "out of step with members and, I think, the country".
He said a majority of Tory MPs would not accept a customs union and Mrs May would effectively be making Mr Corbyn deputy prime minister.
"If we find a majority of Conservative MPs voting against the policy, it's not us who will be moving on," he warned.