Frances O'Grady, the general secretary of the Trades Union Congress umbrella body, accused the government of a "criminal lack of preparation" for Britain's exit from the EU in March 2019.
"The prime minister needs to break free from the hardliners in her party who want a cliff-edge Brexit," she told reporters at the opening of the TUC's annual conference in Brighton.
In an interview with AFP, O'Grady said that "all options are on the table... But from what we see, staying in the single market would be best for Britain, best for workers".
The main opposition Labour party, which has close ties to the trade union movement, last month signalled it would seek to remain in the single market and customs union during the interim period.
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O'Grady said this was a "very sensible position", but said the TUC's longer term test of "jobs, rights and livelihoods" could only be met by maintaining this situation.
All but one of the TUC's 50 affiliated unions -- the transport workers' RMT -- voted on Thursday in favour of a statement outlining the benefits of remaining in the single market indefinitely.
"It's basically designed to make it impossible for the government to negotiate a transitional arrangement," O'Grady said.
"I think they like what they call creative destruction. They won't pay the price, our people will."
The UK has become more reliant on the EU for trade since last year's referendum vote for Brexit, with a weaker economy and "squeezed households", according to a TUC report released ahead of its four-day conference.
"Whatever kind of deal we get, Britain isn't Brexit-ready in our view.
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