By Guy Faulconbridge and Kate Holton
LONDON (Reuters) - Prime Minister Boris Johnson's last-ditch attempt to clinch a Brexit deal was thrown into disarray just hours before a European Union summit on Thursday when the Northern Irish party he needs to help ratify any agreement refused to support it.
Johnson had set his hopes on convincing EU leaders to agree a compromise deal at the summit, followed by a vote in the British parliament in an extraordinary session on Saturday, to pave the way for an orderly departure on Oct. 31.
British and EU negotiators worked through several nights to agree a draft compromise on the Irish border issue, the most difficult part of Brexit, haggling over everything from customs checks to the thorny issue of consent.
But the Democratic Unionist Party (DUP), which supports Johnson's government, said it was not acceptable - a step that could spur hardline Brexiteers in his party to also vote against ratification unless he secures additional changes.
"As things stand, we could not support what is being suggested on customs and consent issues and there is a lack of clarity on VAT," DUP leader Arlene Foster and deputy leader Nigel Dodds said in a statement.
"We will continue to work with the Government to try and get a sensible deal that works for Northern Ireland and protects the economic and constitutional integrity of the United Kingdom."
Just two weeks before the latest deadline for the United Kingdom's departure from the world's largest trading bloc, Brexit remains uncertain with options ranging from an orderly departure to a chaotic exit or even another referendum that could reverse the entire endeavor.
It is unclear what Brexit will ultimately mean for the United Kingdom and the European project - built on the ruins of World War Two as a way to integrate economic power and thus end conflict after centuries of European bloodshed.
A Brexit supporter who was the face of the campaign to leave in the 2016 EU referendum, Johnson has repeatedly said he will not ask for a delay though his government also says it will obey the law.
Johnson, who has no majority in the 650-seat parliament, needs 320 votes to get a deal ratified. The DUP have 10 votes. The British parliament is due to meet on Saturday in an extraordinary session - the first such meeting since the 1982 Argentine invasion of the Falkland Islands.
Sterling slid as much as 0.6% to $1.2748, and also declined 0.5% versus the euro to as low as 86.81 pence, before steadying and recouping some of those losses.
EU SUMMIT
On the eve of the summit, officials said that almost all of the differences between the two sides had been resolved after marathon talks in Brussels.
But any deal must be ratified by the British parliament which has defeated similar deals struck by Johnson's predecessor, Theresa May, three times.
Johnson won the top job by pledging to renegotiate May's failed agreement, though he is largely recasting that deal with changes to the protocol on how to treat the border between EU member Ireland and the British province of Northern Ireland.
The conundrum was how to prevent the frontier becoming a backdoor into the EU's single market without erecting controls which could undermine the 1998 peace agreement that ended decades of conflict in the province.
But unionists such as the DUP - named due to their loyalty to the union of Northern Ireland and Britain - are worried that the EU's proposals would divide the United Kingdom and trap Northern Ireland in the bloc's orbit for years to come.
Germany's Europe Minister Michael Roth said he was hopeful that the Brexit talks would yield a result, adding that the chances for reaching an orderly Brexit were higher than one or two weeks ago.
"From what I have heard on the Brexit talks, I am encouraged to say this could lead to something," Roth told public broadcaster BR on Thursday.