Video report by ITV News Political Correspondent Paul Brand
Boris Johnson will seek to call an early general election if the Government is defeated by a cross-party bid to block a no-deal Brexit.
A Downing Street source confirmed the news just hours after the Prime Minister insisted "I don't want a general election".
The source said MPs will face a "simple choice" on Tuesday when voting on whether to block a no-deal Brexit.
The vote would be treated as though it is a vote of no confidence, and that any Conservative MP voting against the government would have the whip removed from them, the source said.
However, another source close to a group of Tory MPs opposed to no-deal said it was a "bit rich for the Prime Minister to point the finger at colleagues who plan to defy the party whip - colleagues who voted for a deal three times - while he voted with Jeremy Corbyn to inflict the two biggest parliamentary defeats on a government in British history.
"The Prime Minister seems to be doing everything he can to bring about an election, while claiming it’s the last thing he wants.”
Daniel Hewitt explains how Parliament is expected react this week
Shortly before it emerged that Mr Johnson would seek a general election, he demanded MPs side with the Government in Tuesday's key debate, or he said they risk losing any chance of a deal with the EU.
In an address outside Downing Street, Mr Johnson told the country he was "encouraged by the progress we are making" and claimed the chances of a Brexit deal "are rising".
But he said it would "hold us back" if Brussels believed MPs would back a "pointless delay" to Brexit and warned that MPs would "chop the legs out" from the UK position if they backed a Brexit extension.
He repeated "I don't want an election" but it appears one is right around the corner if the government loses Tuesday's expected vote.
Sources say if the PM is ordered to request a Brexit extension, then he'll hold a vote on a general election, which would take place on October 14.
Ahead of his address, Mr Johnson had held a last-minute Cabinet meeting to consider how to tackle the threat of anti-no-deal MPs seeking to take control of Commons business.
Throughout his speech vocal protesters could be clearly heard in the background chanting "stop the coup", in reference to a popular Twitter hashtag.
Police flanked the pavements along Whitehall as protesters waved banners reading "Bring down Boris" and "Remain, reform, revolt".
The PM had put rebels within his party on notice that they face losing the whip and being barred from standing for the Tories if they vote against the government this week.
However Tory rebels remained defiant and Mr Johnson called Cabinet to "discuss government's response to MPs seeking to take control of legislative agenda".
It sparked feverish speculation about the prospect of a general election being called within days if the Government loses the expected Commons vote on Tuesday.
Remainers and those who want to leave the European Union with a deal will attempt to seize control of the parliamentary agenda on Tuesday to force a Brexit extension.
They will try to pass legislation to prevent leaving the European Union without an agreement in place.
Will Boris Johnson call a general election, and if so, could he win? ITV News' Political Editor Robert Peston discusses.
The PM also hosted all Tory MPs at Number 10 on Monday evening for a gathering which may have been awkward for many following the threat to remove the whip from rebels.
Several MPs, including David Gauke, the leader of the so-called Gaukeward squad, have spoken out against the "unusual" and "particularly confrontational" approach.
After the threat of deselection Mr Gauke, the former justice secretary, wrote a blog in which he said "Parliament will have to step in" to stop no deal - a contradiction to the government's stance.
He said: "Unless Parliament intervenes this week, we will leave without a deal. Some may welcome that. But for those of us who believe that this would be a tragic mistake, Parliament will have to step in."
However, if a snap general election is called before October 31, Parliament may not have a chance to intervene.
Mr Gauke also told BBC Radio 4's Today programme he has not been subject to the usual "cajoling" from Cabinet allies to urge him to support the Government's line.
"I don't think there seems to be a huge effort to persuade people to support the Government this week.
"I think they seem to be quite prepared for there to be a rebellion, then to purge those who support the rebellion from the party," he said.
Labour leader Jeremy Corbyn said his party will be ready for an election, despite former prime minister Tony Blair warning him against it.
Brexit explainer: What will happen next?
Mr Corbyn said: "In that election Labour will give people the chance and have the final say in a public vote, with credible options on both sides, including the option to remain."
But Mr Blair said Labour should not "fall into the elephant trap" of backing a Westminster poll if MPs cannot agree on Brexit.
The former PM said he would vote for Mr Corbyn if it would stop a no-deal Brexit, but admitted he felt a "dilemma".
He said: "I personally believe so strongly on Brexit I would do anything to stop it," adding: "On the other hand it's no great secret that people like me have real issues with the programme (for government)."
Explaining the decision was former chief whip Gavin Williamson, who told ITV News: "It is about making sure that the prime minister is in the best possible position to go to Europe and get the best deal from Europe.
"Everyone of those members of the Conservative Party needs to be rallying behind the prime minister, it's what's expected."
Tory party chairman James Cleverly claimed "this is the standard relationship that MPs have with the party of government".
He said: "Politicians shouldn't seek to take the authority of government away from government and hand it to leader of the Opposition."
Mr Hammond called the move to threaten deselection "staggeringly hypocritical" and pointed out how "eight members of the current Cabinet have defied the party whip this year".
Tory MP Alistair Burt said threats to deselect him from the party will not work.
He told ITV News Political Correspondent Daniel Hewitt: "I’d find it very difficult to stand against the Conservative Party, then again I thought it would be very difficult for the Conservative Party to remove the whip from me."
How will MPs try to thwart the PM's plans? Paul Brand explains: