Mr Hunt made clear the position after a long meeting of the Cabinet’s Brexit sub-committee last night, at which he said it was agreed that the UK should retain “the right to choose to diverge” from the EU post-Brexit.
But the stance puts the Government on course for a clash in the Commons after Tories and Labour MPs backed an amendment to Theresa May’s Trade Bill which would commit the UK to a customs union with Brussels.
Mr Hunt did not himself attend the marathon eight-hour meeting of the Brexit group of ministers at Chequers on Thursday night, but said progress on agreeing a joint Cabinet position had been made.
Speaking on BBC Radio 4’s Today programme, Mr Hunt said: “If we were part of the customs union we wouldn’t be able to negotiate trade deals with other countries and we wouldn’t have full sovereign control of our destiny as a sovereign nation.
“But what we want is frictionless trade and we want to find a different way – a customs union is one way of getting frictionless trade but it’s not the only way.
“And what we are saying is that we want to achieve frictionless trade but by agreement between two sovereign bodies the United Kingdom and the European Union.”
Asked if there is any possibility of the Government coming round to the idea of ‘a’ customs union, Mr Hunt said “no”.
The customs union is at the heart of contention over the UK’s position, with those who backed Remain wishing the country to remain within the existing union, or at least a newly constructed union that has some of the benefits.
But Brexiteers, who in recent days have lobbied cabinet ministers over the issue, are adamant that any union would hamper the UK’s ability to sign trade deals after withdrawal.
Mr Hunt explained that an agreement on the UK’s eventual right to diverge from EU regulation was at the centre of discussions at Chequers on Thursday.
He explained: "I think the central understanding - you have divergent views on a big issue like Brexit as you would expect - but the central common understanding is that there will be areas and sectors of industry where we agree to align our regulations with European regulations: the automotive industry is perhaps an obvious example because of supply chains that are integrated.
"But it will be on a voluntary basis, we will as a sovereign power have the right to choose to diverge and what we won't be doing is accepting changes in rules because the EU unilaterally chooses to make those changes."
The move to abandon a customs union sets up a clash in the Commons with pro-soft Brexit MPs, led by Tory rebel Anna Soubry.
She has cross-party support for her plan to mandate the UK to form a customs union with Brussels after Brexit, with only around seven Tories needing to rebel for the move to be made law, tying the Government’s hands..
The move presents an increased danger to the PM because Labour's shadow foreign secretary Emily Thornberry signalled her party now backs a customs union that would look "pretty much like" the current one after withdrawal.
The senior Labour figure also said the UK could join forces with Brussels to negotiate trade deals with third countries after Brexit, rather than make its own global arrangements.
It comes ahead of a major speech by Jeremy Corbyn on Monday in which he is expected to signal backing for closer ties with the EU.