The UK government on Tuesday announced its intention to drastically overhaul post-Brexit trade rules in Northern Ireland, arguing the plan was needed to end political paralysis in the territory but risking a trade war with the EU.

Foreign Secretary Liz Truss said she would introduce legislation reforming the so-called Northern Ireland Protocol "in the coming weeks" – unless Brussels caves on its insistence that the pact cannot be rewritten.

The protocol was agreed as part of Britain's 2019 Brexit divorce deal with the European Union, recognising Northern Ireland's status as a post-conflict territory that shared the UK's new land border with an EU member.

Its requirement for checks on goods arriving from England, Scotland and Wales has infuriated pro-UK unionists in Northern Ireland, who claim the protocol is undermining their place within the UK and are refusing to join a new power-sharing government in Belfast.

"Our preference remains a negotiated solution with the EU," Truss told parliament.

But she added: "To respond to the very grave and serious situation in Northern Ireland, we are clear there is a necessity to act to ensure the institutions can be restored as soon as possible."

Truss denied Britain was breaching international law by effectively abrogating a key element of the Brexit deal, arguing that the government had tried to implement the protocol "in good faith" but had been stymied by EU inflexibility.

The government's "first priority" remains upholding a 1998 peace deal that ended three decades of violence in Northern Ireland, Truss said, rejecting opposition fears the EU could retaliate by imposing swingeing tariffs at a time of surging inflation for the UK public.

Prime Minister Boris Johnson on Monday described the plan as an "insurance" policy, after holding talks in Belfast with leaders of Northern Ireland's main parties.

The largest pro-British party, the Democratic Unionist Party (DUP), said it would not share power with pro-Irish rivals Sinn Fein until the protocol is reworked.

Its hard line came nearly two weeks after Sinn Fein won a historic victory in elections for the devolved Stormont assembly, which entitled the party to the role of first minister in a joint executive with the DUP.

Responding to Truss in parliament, DUP leader Jeffrey Donaldson said the government's announcement was a "good start" that could help restore the Stormont executive.

Keeping the border open with neighbouring Ireland, an EU member, was mandated in the 1998 Good Friday Agreement, given the frontier was a frequent flashpoint for violence.

But it means checks have to be done elsewhere, to prevent goods getting into the EU single market and customs union by the back door via Northern Ireland. (AFP)