Senior Tories said there was “panic” from EU leaders about the impact the UK’s exit would have on security in the face of "increased Russian aggression".
Leaked minutes of a Brexit cabinet committee meeting on March 7 show ministers identified the UK’s “very strong hand” on defence as a key advantage in negotiations.
Those present said security would be a “defining” issue for the EU and that Britain should not “underplay” its hand as it seeks to secure a favourable free trade deal.
Michael Fallon, David Davis, Philip Hammond and Boris Johnson are all understood to have spoken up about the importance of British security to the EU ahead of talks.
A source familiar with the discussions said: “While there were nuances, I think the absolute view around the table was we are in a very strong position and the Europeans know it.
“We go into these negotiations with security and defence being a big thing in our corner.”
A Government source declined to comment on the leak but said that Britain wants “a deep and special partnership with the EU covering all aspects including security”.
The revelations undermine attempts by ministers to play down a furious row that erupted this week after the UK Government appeared to link security cooperation to a trade deal.
Theresa May faced allegations of “blackmail” and “threats” by EU figures after her Article 50 Brexit letter mentioned security 11 times across six pages.
“If ... we leave the European Union without an agreement the default position is that we would have to trade on World Trade Organisation terms,” one part of the letter read.
“In security terms a failure to reach agreement would mean our cooperation in the fight against crime and terrorism would be weakened.”
On the same day Amber Rudd, the Home Secretary, suggested the UK could stop sharing information with Europol, the EU’s law enforcement agency.
Number 10 insisted no “threat” was intended and that the UK Government was not explicitly linking the country’s help on security with a trade deal.
However The Sunday Telegraph has obtained an official account of a meeting of cabinet ministers last month which discussed how security could be used to full advantage in Brexit talks.
It reveals that senior Government figures not only acknowledged EU leaders feared the impact of Brexit on security but expressed a willingness to use their position for leverage.
A paper on Britain’s defence and security drawn up by the Ministry of Defence and the Foreign Office was submitted for discussion.
It both spelled out the country’s existing EU security links and reported back what EU leaders were thinking on the topic – including rising concerns over Russian aggression.
Mr Johnson, the Foreign Secretary, led discussions by saying that Britain had a “strong hand” at the negotiating table when it came to security.
He stressed that “we should not be a demandeur” in negotiations when it came to security – the French word for someone who makes demands – but be aware of the tactical advantage.
Mr Fallon, the Defence Secretary, is understood to have said: “Insecurity in Europe is at its highest since the Cold War. There is increased Russian aggression.”
“The EU needs our capabilities,” he is recorded as adding before saying that the UK had “high cards” to play at the negotiating table on security.
Mr Davis, the Brexit Secretary, is noted as saying: “I agree that Britain has high cards and a very strong hand [on security].”
“The UK is in a strong position and there is a degree of panic within Europe over defence policy and cooperation.” He is said to have added that the UK should not “underplay” its hand.
Mr Hammond, the Chancellor, said that the EU would not offer an economic relationship which deterred Britain from co-operating on defence. He added the UK should make that “clear” during talks.
Theresa May, the Prime Minister, also attended the meeting and summed up at the end. She is understood to have said that defence and security were a “defining issue for the EU” and that the UK is in a “strong position”.
Those familiar with the talks said there was no mention of “threatening” the EU but an acceptance the UK could use its strong position during negotiations.
A Government source said: “We do not comment on Cabinet Committee leaks, however we have been clear that we want a deep and special partnership with the EU covering all aspects including security.
"Our position is simply a statement of fact - if we leave with no agreement in place, the arrangements we currently have will lapse.
"We are not bargaining security with anyone - we want to maintain the degree of cooperation on these matters that we have currently."