The UK will likely have to remain in the customs union beyond 2020, MPs have concluded.

In a report published on Thursday afternoon, the Commons Brexit Committee said it was “highly unsatisfactory” that the government had still not agreed what customs arrangements it wants with the EU.

Brexit Secretary David Davis has said he would consider it a “failure” if Britain had to extend its membership of the current customs union.

But the cross-party committee, made up of both pro-Remain and pro-Brexit MPs, said it could be the “only viable option”.

Hilary Benn, the Labour chair of the committee, said the UK was “rapidly running out of time to get new trade and customs arrangements in place”.

“Given that ministers are indicating that neither of the two options being discussed are likely to be ready by December 2020, when the transition period ends, the UK will in all likelihood have to remain in a customs union with the EU until alternative arrangements can be put in place,” he said.

“Twenty-three months after the referendum and fourteen months since the triggering of Article 50, we still don’t know what the UK’s future relationship with the EU will be on trade, services, security, defence, consumer safety, data, broadcasting rights and many other things.

“The clock is now running down and Parliament will need clarity and certainty by the time it is asked to vote on a draft withdrawal agreement in the autumn. We wait to see whether the promised white paper next month will provide it.”

The cabinet is split over what customs arrangements to put in place.

Theresa May is thought to support a new “customs partnership” where the UK collects tariffs on behalf of the EU for goods intended for the bloc, with traders potentially able to claim a rebate if British duties vary.

While Brexiteers including Foreign Secretary Boris Johnson and Environment Secretary Michael Gove support the so-called “maximum facilitation” plan.

Know as “max fac”, the plan would use trusted trader arrangements and technology like number plate recognition cameras to avoid the need for border checks.

In the report, the MPs also warned the Windrush scandal has “undermined” trust in the ability of the Home Office to competently register EU citizens living in the UK after Brexit.