The Liberal Democrats have insisted their plan to hold a second referendum on Brexit differs from a similar proposal promoted by Labour leadership challenger Owen Smith.

"We would have a second referendum on the terms of the negotiation of what the government come back with, but one of the options in the referendum would be to stay in the European Union under the current terms," a Liberal Democrat spokesman told IBTimes UK.

The policy reportedly differs from Smith since the former shadow work and pensions secretary has proposed a referendum to "ratify" Brexit or not.

The clarification comes as Liberal Democrat leader Tim Farron launches his party's 'Plan for Britain in Europe'.

"We demand that the British people should have their say on the final deal in a referendum. And in the meantime we will hold the Conservative Brexit Government to account and fight for the best possible deal for Britain," Farron will say.

"Voting for departure is not the same as voting for a destination. Brexit means Brexit but we still don't know if that means £350m a week extra for the NHS, immigration controls or membership of the Single Market.

"This is not an attempt to re-run the first referendum. It is to enable the public to vote on the final deal, reflecting that there is disagreement even in the cabinet over every major aspect of Brexit."

The Liberal Democrats, among other things, also want parliament to have a say on triggering Article 50, the official mechanism to split from the EU. But Prime Minister Theresa May has ruled out giving MPs the opportunity to vote on the matter, while confirming it will not be triggered this year.

However, it is currently unclear what Brexit will look like for the UK. Brexit Secretary David Davis suggested it was "improbable" for the UK to remain in the Single-Market because of changes to immigration rules, while Downing Street later distanced May from the remarks, claiming Davis was speaking in a personal capacity.

The Conservative premier has ruled out adopting an Australian-style visa system, which was endorsed by Vote Leave and Foreign Secretary Boris Johnson during the referendum campaign. The Liberal Democrats, meanwhile, have urged the government to protect freedom of movement.