Talks have resumed in Brussels between UK and EU officials amid growing speculation that the UK could leave the EU without a deal in March 2019.
But Stephen Crabb, a member of the Commons Brexit select committee, said that should be avoided “at all costs”.
His comments came after Foreign Secretary Jeremy Hunt claimed the UK would prosper without a deal.
Preseli Pembrokeshire MP Mr Crabb told BBC Radio Wales’ Sunday Supplement programme: “Let’s be clear, this is not the outcome we would want.
“It is the outcome that would have the biggest negative impact on us in the UK and particularly us in Wales.
“I think there will be an enormous political cost to the scenario. In fact, it would represent a failed Brexit. It would be a failure of the Brexit process both for ourselves and the EU.”
On Thursday, the UK government will publish the first in a series of technical notices designed to prepare the UK for the possibility of a no-deal Brexit.
The notices will include advice for businesses, citizens and public bodies.
“It’s [a no-deal] not the government’s plan A, it shouldn’t even be plan B, and an awful lot of work is going on in the negotiations to avoid that scenario,” said former Welsh secretary Mr Crabb, who voted to remain in the EU.
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“We’re focused on getting a good deal and in my view, the plan that was agreed at Chequers by the prime minister is one that seeks to charter a pragmatic course through the middle of this very difficult and complicated debate, represents the right approach.
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“In my view, it gives us the best chance of meeting the objectives that were set out in the referendum campaign by the Leave campaign themselves but also gives us the best chance of protecting our international trade position and protecting our jobs.”
He called on his fellow Conservative MPs to back Prime Minister Theresa May’s Chequers plan to push the deal through.
Brexit Secretary Dominic Raab said securing a deal was still “the most likely outcome” – but added making alternative arrangements was the “responsible” thing to do.
UKIP’s South Wales West AM Carline Jones described the UK government’s Chequers plan as a “mess” and called on the prime minister to “get on” with Brexit.