The border will be on the agenda of special meeting of the British Cabinet's Brexit Committee later on today.
It comes amid reports the European Union is looking for the power to suspend Britain's access to the single market if it violates agreed rules during any transition period.
The option is reportedly contained in a five-page draft treaty that has been circulated in advance chief EU Brexit negotiator Michel Barnier's upcoming whistle-stop tour of the 27 remaining EU countries.
It calls for the restriction option to be used as a remedy in situations where it could take too long to launch legal action to settle a dispute.
Disputes between the EU and the UK during the transition period would normally be settled by the European Court of Justice.
Brexit Committee
Conservative MP Jacob Rees-Mogg speaking to postgraduate journalism diploma students at the Press Association in central London, 05-Feb-2018. Image: Yui Mok/PA Wire/PA Images
UK Prime Minister Theresa May is set to chair this afternoon’s meeting of the UK Brexit Committee.
She will do so in the face of increased pressure from her chief Brexit tormentor, Jacob Rees-Mogg who has made it clear the “punishment” clause is not something the Tory right could accept.
Mr Rees-Mogg has become the darling of the Tory right and their favourite to replace Mrs May as leader.
Brexit campaigners have called on Brexit Secretary David Davis to walk away from negotiations and insist on a "no-deal" Brexit if the clause is not removed.
Draft document
However, the Government dismissed the document as a "draft" and highlighted how Mr Davis had set out the UK's own negotiating objectives for a transition period in a recent speech.
The text has yet to be approved by EU governments.
It will eventually be part of the withdrawal treaty that will regulate the terms of divorce between Britain and the EU and the rules for the transition period after Brexit.
The Taoiseach has insisted that agreements achieved on the Irish border must be translated into the legal text of the withdrawal agreement.
The text reiterates that from 30 March 2019 to 31 December 2020, Britain would be fully bound by all EU laws but will no longer be part of the decision-making process of the EU.
From 30 March 2019, the UK Parliament will no longer be considered a "national parliament" under EU law, nor will the Bank of England be part of the European system of central banks.
It also says UK officials may, on a case-by-case basis, be invited to attend meetings in the European Parliament, European Commission or the Council of EU ministers when a British presence is necessary and in the interest of the EU, such as in the case of agreeing fishing quotas.
Britain will be able to negotiate new trade deals with other countries, but cannot put them into effect during the transition period unless authorised by the EU.
Walking the plank
leading Labour MP Chuka Umunna, a leading supporter of the pro-EU Open Britain campaign, said: "The EU's leaked position paper underlines one thing: all the proposed transition does is push the cliff-edge out a little bit further.”
"Transition increasingly looks less like building a bridge and more like being made to walk the plank. We should not leave the EU until we know where we are going," he said.
