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Senior Government sources said Brexit Minister Steve Baker — who denies claims he was involved — and Suella Fernandes, an aide to the Chancellor, would keep their jobs.
But a senior MP said the letter they were accused of backing had been “unacceptable” and was part of a plot to “undermine” attempts by Chancellor Philip Hammond to avoid a cliff-edge Brexit.
Nicky Morgan, who chairs the Treasury Select Committee, hinted that Mrs May should discipline the pair by saying too often party leaders had “tried to appease” hardline Eurosceptics.
Between 30 and 40 Conservatives signed a letter demanding that Mrs May take Britain all the way out of the EU in March 2019 without a transition period, saying the country must be allowed to sign free trade deals and stop paying money to Brussels.
It was circulated among members of the Conservative European Research Group, which is chaired by Ms Fernandes.
Mr Baker, a former chair of the group and one of the key leaders of the Leave campaign, was accused of involvement because he posted a message saying “thanks for everyone’s support” but he says he was thanking members for cheering him in the Commons, not for signing the letter.
Ms Morgan told the Today programme: “I think it is unacceptable for a group within the Conservative Parliamentary Party to issue demands … That seeks to undermine the UK’s negotiations with the EU.”
She said the letter “goes beyond Government policy” and should not have been backed by people “on the Government payroll” whose job was to explain policy to the public.
“The Prime Minister has made very clear she does want there to be a deal with the European Union.
“Having people undermine that while these very difficult negotiations are going on is not helpful for anyone.” She added: “Look, there are many of us in the Conservative Parliamentary Party who feel that successive leaders have tried to appease the views of those who are in the European Research Group or have been putting these views forward.”
A source said there had been “conversations” but the pair would be staying in their posts. “We’re focused on getting the best deal for the UK in Brexit negotiations,” said the source.
Critics said it showed the Prime Minister was too weak to crack down on Right-wing dissidents.
The Liberal Democrats claimed it showed the Conservatives were in “meltdown” and said Mrs May must “assert her authority”.
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