Philip Hammond was slammed this week for saying the UK’s trade relations with the EU would change only “very modestly” after Brexit.
The Chancellor’s comments sparked anxiety among Leave supporters such as Jacob Rees-Mogg that Brexit may be delivered “in name only”.
Mr Hammond was rebuked by Number 10 but stoked Tory divisions further by saying the UK should seek a “middle way” in negotiations in order to maximise access to EU markets.
And Ms Villiers said she felt “compelled to speak out” today following the controversy.
Writing in The Telegraph, she said: “I understand why some are becoming nervous about the current situation.
“Since the Prime Minister set out a bold vision in her Lancaster House speech, the direction of travel seems to have gone in only one single direction: towards a dilution of Brexit.
“If the Government goes too much further down that path, there is a real danger that it will sign up to an agreement which could keep us in the EU in all but name and which would therefore fail to respect the referendum result.”
She called on Theresa May to ignore “immense pressure” to water down the “optimistic vision” outlined in her Lancaster House speech.
On the BBC’s Sunday Politics today, she continued to express her serious concerns over the direction of talks.
She said: “If you go too far with compromise, eventually you get to a point where we wouldn’t genuinely be leaving the European Union, we wouldn’t be respecting the results of the referendum.
“I’m concerned, in particular I think we must retain the right to diverge from EU laws.
“One of the key points of leaving the European Union is to ensure that we once again make our own laws in our Parliament and not be subject to laws made by people we don’t elect and can’t remove.”
“What I want to do is to ensure the case for a real Brexit is made.”
On the same programme, Brexit minister Lord Callahan defended the Government’s approach and insisted the concerns of backbenchers were wrong.
He said: “We’re not going soft. There’s been no backsliding on the Prime Minister’s Lancaster House speech, where she set out the framework for our future relationships.
“We will be regaining control of our laws, our money and our borders.
“We will be establishing an independent trade policy, as she set out in that speech, so there has been no backsliding.”