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Theresa May said there was a "clear majority" against a no-deal Brexit but the "legal default" was that the UK would leave without a deal on 29 March if no deal is reached.
MPs will now get a vote on delaying Brexit, said the prime minister.
That vote will take place on Thursday, and if it is passed - and the EU agrees to it - the UK will not leave the EU as planned on 29 March.
There could be a short extension - or a much longer one - depending on whether MPs backed her withdrawal deal "in the coming days", said the prime minister.
That means the government could make a third attempt to get Mrs May's deal through Parliament by 20 March, after MPs voted overwhelmingly on Tuesday to reject it.
Commons proceedings descended into confusion earlier, as the government tabled a motion to prevent the UK from exiting the EU on 29 March without a deal.
Before MPs voted on the government motion, they backed an amendment tabled by Labour's Yvette Cooper rejecting a no-deal Brexit under any circumstances - by just four votes.
This dramatic development led to the government ordering Conservative MPs to vote against its own motion, despite earlier promising them a free vote.
The government motion, as amended, was passed by 321 votes to 278, a majority of 43, reinforcing the message that MPs do not want to leave without a deal. [...]