Campaigners have instructed lawyers to begin a legal challenge over whether leaving the European Union means automatic withdrawal from the single market.
The British Influence think-tank wants a judicial review of the government’s legal position on membership of the wider European Economic Area which forms the internal trading bloc.
The think-tank believes that leaving the EU does not mean quitting the EEA, which extends the single market’s tariff-free trade in goods to countries including Norway, Iceland and Liechtenstein.
A legal challenge could result in Parliament being given the final say on EEA membership.
A think-tank spokesman said: “There is no need for a hard Brexit and there is no mandate for a hard Brexit.”
The group believes Britain does not need to quit the single market to control immigration, end payments to EU coffers or return powers to the UK Parliament.
It also said voters did not decide to leave the trading arrangement when they backed Brexit in the 23 June referendum.
Group chairman Peter Wilding said: “This is not stopping Brexit, this is shaping it. The country demands a win-win, smart Brexit, not a lose-lose ideological hard Brexit which will damage the UK, damage Europe and for which there is no need and no mandate.”
Meanwhile, European Union nationals living in the UK before the formal Brexit process is triggered should be allowed to remain in the country permanently, an expert panel has recommended.
Prime Minister Theresa May’s refusal to agree the status of the nearly three million European Union citizens in the country unless the rights of Britons living on the Continent are guaranteed is “morally wrong”, according to an inquiry run by think-tank British Future.
It called for the UK to “make the first move” to demonstrate “goodwill” as it embarks on its divorce negotiations.
The panel, which included a cross-party group of MPs, said all 2.8 million EU nationals should be eligible for permanent residence with the same health, social and education rights as British citizens.
It found that setting the date Article 50 is triggered would not lead to a surge in migration from across the bloc and European Economic Area nations.
Labour’s Gisela Stuart, said: “Our inquiry found that people from different sides of the referendum and politics can quite easily agree on practical, straightforward ways to ensure that EU nationals can stay in Britain with their rights protected.
“That’s the right thing to do.”