The UK is due to leave the European Union on 29 March but MPs rejected the withdrawal deal on offer in January and demanded major changes.
"Leaving in just 16 days time with no transition and little meaningful preparation from government would be catastrophic for jobs, living standards and would lead to a hard border in Northern Ireland".
The EU said no deal plans were "more important than ever" after the defeat.
Under a temporary scheme 87% of imports by value would be eligible for zero-tariff access - up from 80% at present.
Numerous EU leaders expressed their dismay after MPs voted by 391 to 242 votes to reject Mrs May's deal.
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Reports suggested the PM would vote against a no-deal tonight but she said the ballot would be "free", with no obligation for cabinet members to toe the party line.
To secure an extension to Article 50, Mrs May would need the support of the 27 other European Union states.
But the votes are not binding and a no-deal Brexit on March 29 remains the default position until an extension is agreed. "It is not sustainable, the current situation in parliament", he told BBC Radio 4′s World at One programme.
Speaking after the defeat and struggling with her voice, she said: "I continue to believe that by far the best outcome is the United Kingdom leaves the European Union in an orderly fashion with a deal".
He repeated that call last night: "We are now only two-and-a-half weeks away from crashing out of the European Union without a deal, which would have extremely serious economic, social and political ramifications - hitting the most vulnerable hardest with possible food price rises and medicine shortages".
THE future of Brexit was thrown into deeper uncertainty as Theresa May suffered another crushing defeat in the Commons last night.
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Some of her colleagues around the Cabinet table think it shows she has to tack to a closer deal with the EU.
MPs will vote on Wednesday evening on whether to reject a no-deal Brexit.
Downing Street said the PM's focus was "getting on with the work required to allow MPs to support the deal and to bring this stage of the process to an end".
Ms Smith, who voted to remain in the EU Referendum in 2016, voted against the government's Brexit deal last night because it "doesn't deliver what my constituents voted for".
She will tell MPs whether she will vote for no deal or not when she opens Wednesday's debate.
"I'm not in any sense a fan of her staying for any longer than necessary, but right now it is necessary that she continues to conduct these negotiations".
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'This means doing what the Prime Minister failed to do two years ago in searching for a consensus on the way forward, ' he said.