Brexit Secretary David Davis said the UK could pay the European Union for access to the single market after it leaves the bloc.

The admission caused to pound to surge 1% higher against the dollar, changing hands at $1.26, its highest level in three weeks. The pound also lifted 0.63% against the euro to €1.18.

During a question session in the House of Commons, Davis said the government would "of course" consider paying to retain single market access.

He was asked by Labour MP Wayne David: "Will the government consider making any contribution in any shape or form for access to the single market?"

The Brexit Secretary replied: "The major criterion here is we get the best possible access for goods and services and if that is included in what he's talking about then we'll consider it."

The prime minister's spokeswoman said Davis's view was "consistent with what we have said to date, which is that it will be for the UK government to make the decision about how taxpayers' money will be spent".

Senior market analyst at retail brokerage Oanda Craig Erlam said: "The idea that single market is still a priority is a move away from the 'hard Brexit' line."

Hilary Benn, Labour chairman of the Commons Brexit Select Committee, urged the government in the Commons to publish details of its vision for post-Brexit Britain to clear up confusion about its negotiating strategy.

Bespoke deals

Labour former shadow health secretary Heidi Alexander added: "We are no further forward with a plan to leave the EU than we were five months ago."

A number of senior EU figures have said countries outside the bloc who want access to the single market would need to pay into the body's coffers.

Norway, a member of the European Economic Area, pays €870m (£730m) a year to trade in the single market, take part in EU research programmes and for criminal justice cooperation.

Economists estimate this bill for the UK, a much larger trading nation, would be between £4bn-£5bn.

The UK's current net contribution to the EU was £8.5bn in 2015.

However, Prime Minister Theresa May has repeatedly stressed she will seek a bespoke deal for Britain, rather than plucking an existing model off the shelf.