Arlene Foster's party abstained on a series of key budget votes in protest at Ms May's proposed Brexit deal, which it has vowed to vote against.
The move appears to violate the terms of the DUP's confidence and supply agreement with the Conservatives and raises fresh questions over the ability of Ms May government to pass crucial legislation.
Under the terms of the deal, the DUP agreed "to support the government on all motions of confidence, and on the Queen's Speech, the Budget, finance bills, money bills, supply and appropriation legislation and Estimates".
Downing Street has previously insisted the pact remains in place, despite the DUP's staunch opposition to the government's Brexit plans.
The Northern Irish party has said it will not be able to support Ms May's deal unless she ditches the proposed backstop, which would see increased regulatory checks between Northern Ireland and the rest of the UK.
The DUP's decision to withdraw its support during votes on the Finance Bill on Monday night casts further doubt over the future of its agreement with the Tories.
All eight of the party's MPs present in the Commons abstained on three votes, and even joined forces with Labour to support one amendment relating to child poverty.
Sources suggested the move was a warning shot to Ms May over her Brexit plan.
It will come as a further blow to the beleaguered prime minister as she attempts to build support for her Brexit deal while staving off a backbench rebellion and the threat of a no confidence vote against her.
Jon Trickett, Labour’s shadow minister for the cabinet office, said: "We no longer have a functioning government. With Brexit only a few months away something has got to give."
Ms May was forced to strike the "confidence and supply" arrangement with the DUP, secured with almost £2bn of additional funding for Northern Ireland, after she lost her majority at the snap general election in June 2017.
She is almost certain to need the party's support if she is to have any hope of getting her Brexit deal through Parliament.
However, Ms Foster has dismissed claims that the prime minister's plan is the only alternative to a no-deal Brexit as a "false choice" and insisted a legal backstop is not needed to maintain an open border in Northern Ireland.
Responding to Irish Taoiseach Leo Varadkar saying he was "not contemplating" a hard border in the event of a no-deal Brexit, the DUP leader claimed the row over the managing of the border was "only ever a negotiating tactic by the European Union".
She said: "The Taoiseach's comments that the Irish government is not contemplating a hard border in the event the withdrawal agreement is rejected by Parliament underlines why a focus on the backstop was only ever a negotiating tactic by the European Union.
"We have been told that the backstop is only necessary to prevent such a hard border, but these comments make it clear that the EU's insistence on a backstop was not aimed at this. The European Union's focus on the border between Northern Ireland and the Republic has only ever been a negotiating tactic to secure its own aims in the negotiations."
She added: "The comments also further underscore how the inclusion of a border down the Irish Sea within the current withdrawal agreement is not only unacceptable, but is also unnecessary.
"The withdrawal agreement was based on the false choice that an internal UK border was the only way to prevent a hard border between Northern Ireland and the Republic."
The latest blow for Ms May came as ministers were forced to back down and agree to publish economic analysis comparing the consequences of the prime minister's deal with the option of remaining in the EU.
Facing the prospect of a humiliating Commons defeat after a backbench rebellion, the government said it would release the assessments before MPs vote on the proposed withdrawal agreement. The analysis is expected to show that staying in the EU would be better for the economy than Ms May's planned deal.
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