Theresa May's Brexit deal was defeated a 149-margin on Tuesday evening;
British lawmakers will debate and vote on whether to allow a no-deal Brexit on Wednesday, May said;
If MPs reject the plan, there will be a vote on Thursday on extending Article 50, but the prime minister warned that if they vote for an extension, the EU would want to know if the UK wants to revoke article 50 or to hold a referendum.
British lawmakers on Tuesday rejected May's Brexit deal for a second time with 391 votes against, 242 in favour.
MPs first rejected the deal on January 14 by a margin of 230, handing May the worst defeat of any sitting government in British parliamentary history.
The prime minister said immediately after the vote that MPs now face "an unenviable choice" and said she still believes that her deal is the best and only deal available.
May said if lawmakers backed a no-deal Brexit on Wednesday, it would become government policy.
A division list released by the Commons website shows that 75 Conservative MPs rebelled against May. They were joined by 232 Labour MPs, 17 independent MPs, and every single MPs from Scotland's National party (35), the Liberal Democrats (11) and Northern Ireland's Democratic Unionist Party (10).
In favour of the deal were 235 Conservative MPs, 4 independent MPs and 3 Labour parliamentarians.
The deal 'is clearly dead'
Jeremy Corbyn, leader of the main opposition labour party, said the result shows her deal "is clearly dead."
He added that Labour will put its proposal forward again, which includes "a negotiated customs union, access to the (single) market and protections of rights."
"The Prime Minister has run down the clock," he went on, "maybe it’s time instead we had a general election."
Earlier in the day, May, speaking in a croaky voice, reminded MPs that a rejection of her deal could eventually lead to the UK crashing out of the EU without an agreement, in which case it "would be no good blaming the EU," she said, adding: "Responsibility would lie with the House."
In the long term, the UK would make a success of a no-deal scenario, she added, but could expect to experience a shock to the economy, and growth in independence movements in Scotland and Nothern Ireland.
An extension to Article 50 would also place power in the EU's hands, she warned. The EU would decide how long, if any, an extension would be allowed, and whether to place restrictions on it.
'We have done all that is possible'
European Council President Donald Tusk said in a statement: "We regret the outcome of tonight's vote and are disappointed that the UK government has been unable to ensure a majority for the Withdrawal Agreement agreed by both parties in November."
"On the EU side we have done all that is possible to reach an agreement," he went on and said the result "has significantly increased the likelihood of a 'no-deal' Brexit."
He reminded British lawmakers that should they vote for an extension of Article 50, "the EU27 will expect a credible justification for a possible extension and its duration," arguing that "the smooth functioning of the EU institutions will need to be insured."
European Commission President Jean-Claude Juncker explained on Monday evening in a letter after an 11th-hour negotiation with May in Strasbourg that the UK's "withdrawal should be complete before the European elections that will take place between 23-26 May" as otherwise the country "will be legally required to hold these elections."
'The impasse can only be solved in the UK'
Michel Barnier, the bloc's chief EU negotiator, also lamented the result of Tuesday's vote in the British parliament, saying "the impasse can only be solved in the UK."
"Our "no-deal" preparations are now more important than ever before," he added.
May's dash to Strasbourg
May secured legally-binding changes to the backstop arrangement on Monday evening on an 11th-hour dash to Strasbourg to meet Juncker.
But the EU concession — which Juncker had stressed was a "second chance" and that "there will be no third chance" — was dealt several blows from areas in which she had hoped to gain support.
Attorney General Geoffrey Cox published his legal opinion on May's latest concessions, saying the EU had not given the UK the legal right to exit the backstop.
Despite following up and maintaining that his comments were based on legalities, and not political opinions (therefore not taking into account any "good faith" UK-EU relations), the statement went on to fuel rejections from two key camps: the DUP and the pro-Brexit European Research Group (ERG).
"In our view, sufficient progress has not been achieved at this time," the DUP said in a statement, which was echoed in a separate statement from the ERG.
Contradicting May's view that the blame for rejecting her deal would not lie with the EU, the DUP added: "The European Union has been intransigent."
"It is possible to reach a sensible deal that works for the United Kingdom and the European Union but it will require all sides to be reasonable and be in deal-making mode."
The pound sterling also registered a negative effect after Cox's comments. While it had steadily strengthened since Monday after May's trip to Strasbourg to seek concessions on the backstop, it dropped sharply on Tuesday morning.
Has the EU set a 'trap'?
In her speech to the Commons in the afternoon, May commented on the murmurs of a legal vs political "trap" the EU could set should the UK rely on a "good faith" negotiations over the backstop.
"I've fought hard to address these concerns," she said, adding, "I'm certain we've secured the very best changes available."
A former British official for the EU Commission Jonathan Faull said that people who thought the UK could legally exit the backstop unilaterally "fail to understand its meaning and purpose."
"Anyone who thinks the EU has set a trap for the UK in bad faith has a poor understanding of relations with the country's nearest friends and neighbours," he added.