Minister for Foreign Affairs Simon Coveney has said for many people it is "pretty shocking that the British government is voting through its parliament a bill that breaks international law".
He said it erodes trust and makes complex negotiations even more difficult.
He added that it has been a deliberate strategy of the UK government that is "very, very unwelcome" and damages Britain's reputation internationally.
The big challenge for the negotiating teams is to resolve issues that "make this legislation irrelevant" in a bid to secure a deal that is acceptable to all parties, Mr Coveney said speaking on his way into a Cabinet meeting.
Minister Simon Coveney has said for many people it is 'pretty shocking that the British government is voting through its parliament a bill that breaks international law'. He said it makes complex negotiations even more difficult | Read more Brexit stories: https://t.co/RQiqrJHFRo pic.twitter.com/ybbAyokzZO— RTÉ News (@rtenews) September 15, 2020
The European Parliament trade committee negotiator for EU-UK relations has said the European Union has made compromises and shown openness in its approach to trade negotiations with Britain, but would not proceed unless the UK's Internal Markets Bill is amended or withdrawn.
Luxembourg MEP Christophe Hansen told RTÉ's Morning Ireland that the EU now fears that non-compliance with the Withdrawal Agreement could pose major damage to the internal EU market and the Irish peace project.
Mr Hansen said that the EU wants as close ties as possible with the UK in future as there are huge mutual interests in that, but that without "full respect" for the Withdrawal Agreement, trade talks could not proceed.
He said while talks are now on hold as the EU asks for the elements of the controversial BIll to be withdrawn by the end of September.
Despite this, he said the EU favours reaching a deal but would not allow the UK to cherry-pick on commitments.
Mr Hansen said the EU has shown openness on fisheries and has moved from a status quo to a new position in an attempt to reach a compromise.
He said the EU thought that the UK was a reliable partner and could stick to its commitment and to its signature. It is "a disappointment" and concerning to see the UK seek to implement legislation that would break an international agreement, he said.
The EU would seek at least the same commitments from the UK as it is giving to other trading partners, including Japan, where the UK has gone further with agreements on state aid, he added.
UK government 'ensuring it stays true' to Good Friday Agreement
Britain's Home Secretary Priti Patel has said the UK government is ensuring it stays true to the Good Friday Agreement with the UK Internal Market Bill.
"When it comes to preserving the integrity of the UK and clearly delivering for the people of Northern Ireland when it comes to the Good Friday Agreement, we've said from day one... that we would always stand by our word and not compromise when it comes to unfettered access in goods and services but also standing by the Good Friday Agreement," she said on BBC Breakfast.
"We are ensuring the UK Internal Market Bill stays true to that principle that is why we are bringing this bill forward."
Meanwhile, a Conservative Party former cabinet minister has said it would be "unacceptable" to breach international law with legislation to override the Brexit divorce deal.
Andrew Mitchell hit out at clauses in the UK government's Internal Market Bill.
He told BBC Radio 4's Today programme: "The proposition that we should march through the Lobby as lawmakers and say that we are going to ignore and disavow a law that we have passed, to do with the rule of law, that is completely unacceptable."
Mr Mitchell said he backed large parts of the Bill, but would not back it unless it was amended, but "... deliberately voting to breach international law is something which I cannot do.
"And which is causing very considerable anxiety and worry on the backbenches.
"We all want to help the Government with these negotiations, but to do that flies in the face of all British tradition."
Yesterday British Prime Minister Boris Johnson's controversial plan to override key elements of the Brexit deal he signed with Brussels cleared its first Commons hurdle despite deep misgivings by some senior Tories.
MPs voted to give the UK Internal Market Bill a second reading by 340 to 263 - a government majority of 77.
Additional reporting PA