The UK will not retain "partial" membership of the EU once it leaves, Theresa May will say in her much-anticipated Brexit speech.
The PM will tell other European countries the UK wants to trade with them "as freely as possible" but will not be "half-in, half-out" of the EU; BBC reported.
Her speech is expected to include further hints Britain could leave the EU single market.
Downing Street said she would set out 12 negotiating objectives.
The government has so far revealed few details about what it wants to secure from the Brexit talks.
But it has said formal negotiations on the UK's exit package will be triggered by the end of March.
The PM's speech will be closely-watched for signals on what the UK's future trading relationship with the EU could look like, in particular its involvement in the single market and the customs union.
EU leaders have said the UK cannot "cherry pick" access to the single market while restricting the free movement of people, and Mrs May has suggested curbing migration will be her top priority.
Labour's Sir Keir Starmer, the Shadow Brexit secretary, said the UK should stay in the customs union.
He told BBC Newsnight: "We have to decide how we front up to these negotiations. We need to aim for the best deal for the UK.
"That's the deal that works for trade, it's a deal that accepts there has to be change on freedom of movement rules. That's the starting position.
"Preserving our ability to trade successfully in Europe has to be the priority for business. Staying in the customs union is the best way to achieve that."