The warning came as Tory leadership hopefuls Boris Johnson and Jeremy Hunt came under fire over hardline promises to scrap the Irish backstop, which sent the pound plummeting amid growing concern about a no-deal outcome.
Britons buying foreign currency ahead of summer holidays got less for their money as sterling plunged to a six-month low against the euro and a 27-month low against the dollar.
Both candidates to replace Theresa May as prime minister declared her backstop deal dead during their final campaign debate on Monday, fuelling expectations of a disorderly departure from the EU.
Fears of a no-deal Brexit were heightened by reports that Mr Johnson is considering calling a Queen’s Speech in early November, triggering a recess of up to two weeks in the second half of October to keep MPs out of parliament in the vital days around the Brexit deadline at the end of the month.
The Johnson camp played down the idea, but Tory MP Guto Bebb, a prominent Remain supporter, said he believed the leadership frontrunner was “quite seriously contemplating” suspending parliament.
“I think that would be an outrage to our democratic traditions, it would be unacceptable and the worst part is I believe they are quite seriously contemplating doing just that,” he told Sky News.
Unlike Mr Hunt, Mr Johnson has not ruled out using a mechanism known as prorogation to suspend Commons sittings in order to stop MPs from blocking a no-deal Brexit.
Analysis released by the People’s Vote campaign suggested that the combined increase in the cost of flights, hotels, insurance and mobile roaming fees could add £225 a person onto the cost of holidays to the most popular resorts in Spain and Greece following a disorderly withdrawal from the EU, which could see the pound reach parity with the euro.
Labour MP Wes Streeting, a leading supporter of the campaign for a second referendum, said: “Boris Johnson and Jeremy Hunt want to impose a hard Brexit, or even a destructive no-deal on us, without giving us the final say.
“That won’t just threaten jobs in the car industry, steel or financial services, it will hit ordinary families hard by trashing the value of the pound and sending the price of everything from petrol at the pumps to two weeks at Disneyland soaring.”
A leaked government document warned of the danger that food and medicine shortages after a no-deal Brexit could also trigger riots in prisons.
The memo was withdrawn from the database of government contracts after the Ministry of Justice was alerted to its contents, which were not properly redacted by officials.
Conservative MP Phillip Lee, a former justice minister who quit the government to campaign against Brexit, seized on the warning, saying: “It’s clear that no-deal would be disastrous for our country.
“No one voted for unrest in prisons, shortages of food supplies or any of the other indignities that could result from a disastrous no-deal.“
But a second Labour MP today said she would accept a no-deal Brexit instead of no Brexit at all.
”I want us to leave, the country wants us to leave and for our democracy I think we have to leave ... So therefore if it came to it I would take no deal, because we have to leave,” said Rotherham MP Sarah Champion.
Meanwhile, a former UK ambassador to the EU revealed that he warned Ms May and Mr Johnson as long ago as 2016 that the PM’s promises on Northern Ireland’s position following Brexit were “not compatible with each other”.
Sir Ivan Rogers told a committee of MPs that his warning was “one of the most unpopular things” he had said to the PM before quitting as the UK’s man in Brussels.
Ms May had promised Dublin that there would be no hard border, said to Unionists in Ulster that there would be no divergence from the rest of the UK and told the Conservative right that Britain was leaving the EU’s customs union, he said, adding: “You can’t do all three. You have got to choose two of the three.”
The pound weakened by 0.5 per cent on Tuesday to $1.2455, a six-day low. If it falls below $1.2439 it would hit its lowest level in more than two years, excluding a flash crash earlier this year.
As millions prepare for their summer holidays, the pound fell 0.3 per cent to 90.25p against the euro, the lowest since 11 January.
Both candidates have already refused to rule out a no-deal Brexit, with Mr Johnson pledging to take the UK out of the bloc on 31 October, with or without a deal.
Brussels insists that the backstop – which prevents a hard border on the island of Ireland – must be a part of any Brexit deal.
But Mr Johnson told The Sun‘s leadership debate: “No to time limits or unilateral escape hatches or all these elaborate devices, glosses, codicils and so on that you could apply to the backstop.”
Mr Hunt agreed, adding: “The backstop, as it is, is dead ... I don’t think tweaking it with a time limit will do the trick, we’ve got to find a new way.”
Simon Hoare, the Tory MP chairman of the Northern Ireland affairs committee, called the comments “worrying and depressing”.
“Both of the candidates yesterday moved the goalposts,” he told Sky News, adding: “All I can hope is that this is prose caught up in the heat of an election campaign.
”It is not good for the Union – this is a very dangerous step that both men seem to have taken.“
Tory Brexit rebel Dominic Grieve said the remarks confirmed Brexiteers would simply ”put up another obstacle“ if anyone was able to solve the backstop issue because it is being ”used as an excuse because of this radicalisation“.
“I’ve always been willing as a politician to listen to people willing to come up with credible compromises but what I’ve found so staggering about the Conservative leadership (contest) is it has been played to a tune of growing extremism,” said the former attorney general.
Speaking alongside Mr Grieve, Labour MP Margaret Beckett called the candidates’ backstop pledges “terrifying” and accused them of throwing “the Irish situation under a bus”.
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