Britain's Prime Minister Theresa May poses with European Commission President Jean-Claude Juncker during a summit between Arab league and European Union member states, in the Red Sea resort of Sharm el-Sheikh, Egypt
* May to rule out no-deal Brexit - two newspapers
* Sterling rallies against dollar and euro
* Labour to back call for Brexit referendum
British Prime Minister Theresa May will on Tuesday propose formally ruling out a no-deal Brexit in a bid to avoid a rebellion by lawmakers who are threatening to grab control of the divorce process, The Sun and Daily Mail newspapers reported. As the United Kingdom's labyrinthine Brexit crisis goes down to the wire, May is making a last-ditch effort to get changes to the separation package but lawmakers will try on Wednesday to impose their authority in a series of parliamentary votes. After the British parliament voted 432-202 against her deal in January, the worst defeat for a government in modern British history, May has tried to use the threat of a potentially disorderly no-deal Brexit to get concessions out of the EU. But many British lawmakers and some of her own ministers have warned they will try to take steps to avoid thrusting the world's fifth largest economy into a potentially tumultuous economic crisis. May on Tuesday will propose to her cabinet of senior ministers that she formally rules out a no-deal Brexit, opening the door to a delay of weeks or months to the March 29 exit date, The Sun newspaper reported. The Daily Mail newspaper said May is ready to rule out a no-deal Brexit after as many as 15 ministers said they were ready to resign. A Downing Street spokesman declined to comment on the reports. Reuters reported on Monday that May's government was looking at different options including a possible delay. Sterling rose 0.4 percent to $1.3152, near a one month high. Against the euro, sterling rallied nearly half a percent to a one-month high at 86.31 pence. It was not immediately clear how May would rule out a no-deal. She is due to chair a cabinet meeting on Tuesday and then update parliament at around 1230 GMT. Her de-facto deputy, David Lidington, told BBC radio he would not disclose what cabinet would be discussing. In the June 23, 2016 referendum, 17.4 million voters, or 51.9 percent, backed leaving the EU while 16.1 million, or 48.1 percent, backed staying. With just a month to go until Brexit, the ultimate outcome is still unclear with scenarios ranging from a last-minute deal to another referendum that May has warned would reopen the divisions of the 2016 referendum. The opposition Labour Party said on Monday it would back calls for a second referendum on Brexit if parliament rejects its alternative plan for leaving the EU. When asked if May was going to delay, Lidington did not address the question directly but said a delay did not resolve the issue but merely deferred a decision. "These negotiations are at an absolutely critical time," he told Sky News, adding that he hoped a vote on May's deal could happen as early as next week. "We need to hold our nerve as a government, get behind the prime minister." After meeting EU leaders in the Red Sea resort of Sharm El-Sheikh on Monday, May said a timely exit was "within our grasp" and insisted that delaying Brexit would be no way to solve the impasse in parliament over the departure.