The UK has demanded “significant” changes to Northern Ireland’s post-Brexit trading arrangements but has held back from tearing up parts of the deal.

Brexit minister Lord Frost said “we cannot go on as we are” but held back from using provisions in the deal which could allow elements of it to be suspended – although he claimed the conditions allowing him to do so had been met.

He warned the “purist” way the Northern Ireland Protocol was being implemented was causing economic and societal damage.

Lord Frost called for a “standstill” period maintaining existing grace periods allowing the flow of goods from Great Britain to Northern Ireland.

But he also said his plans to resolve the difficulties would require a “significant change to the Northern Ireland Protocol” and “we do not shy away from that”.

The Protocol, part of the Brexit divorce deal signed by Boris Johnson and negotiated by Lord Frost, effectively keeps Northern Ireland in the European Union’s single market for goods.

This means checks on goods being sent from Great Britain into the single market – and in some cases could result in prohibitions on certain products that do not comply with EU rules.

The Protocol was put in place to ensure there would be no hard border with Ireland, but it has instead effectively placed a trade barrier in the Irish Sea.

Put very simply, we cannot go on as we are

Lord Frost said a “new balance” in the arrangements was needed to enable goods meeting EU and UK standards – rather than just the rules set by Brussels – to circulate in Northern Ireland.

The relationship between the UK and EU should no longer be policed by the European Court of Justice, he added.

“All of this is entirely consistent with maintaining an open border without infrastructure checks between Ireland and Northern Ireland,” he said.

He told peers: “We urge the EU to look at it with fresh eyes and to work with us to seize this opportunity and to put our relationships onto a better footing. We stand ready to work with them to deliver the brighter future which is in reach.”

The proposals published by the Government include:

– An “evidence-based and targeted approach” to goods at risk of entering the single market, but products destined just for Northern Ireland would be allowed to circulate “near-freely”.

– Continued access in Northern Ireland to goods from the rest of the UK, through a regulatory approach which accepts both British and European Union standards.

– A “normal” treaty framework to govern the arrangements, with no role for the Court of Justice.

One idea put forward would be for UK traders to declare whether the final destination for their goods was Northern Ireland or Ireland.

“Full customs formalities would be required for goods going to Ireland and the UK would undertake to enforce them. Other goods would not require customs processes.”

Lord Frost set out why change was necessary – highlighting the economic and social damage which he said would have justified the use of Article 16, effectively tearing up parts of the deal.

“There has been significant disruption to East-West trade, a significant increase in trade on the island of Ireland as companies change supply chains and considerable disruption to everyday lives.

“There has also been societal instability, seen most regrettably with the disorder across Northern Ireland at Easter.”

This Christmas, I can tell you already, we’re having to make decisions to de-list product for Northern Ireland because it’s simply not worth the risk of trying to get it through

There was a “false, but raw” perception in the Unionist community of separation from the rest of the UK which has had “profound political consequences”.

Lord Frost told peers that while there had been progress in talks with the European Union “overall, those discussions have not got to the heart of the problem”.

“Put very simply, we cannot go on as we are,” he said.

Northern Ireland had faced reductions in supermarket product lines, with 200 suppliers deciding they would no longer sell there.

Marks & Spencer’s chairman warned there will be some “gaps on shelves” in Northern Ireland this Christmas.

Archie Norman told BBC Radio 4’s Today: “This Christmas, I can tell you already, we’re having to make decisions to de-list product for Northern Ireland because it’s simply not worth the risk of trying to get it through.”

Shadow Cabinet Office minister Baroness Chapman said: “The Government promised to ‘Get Brexit Done’. And yet here it is trying to unpick it.

“The Government must find agreement to fix the problems the Prime Minister created. What we have is yet more political brinkmanship – more threats to tear up the Protocol with nothing to take its place.”

DUP leader Sir Jeffrey Donaldson welcomed the Government’s move as a step in the right direction but added: “Sticking plasters and short-term fixes were never going to work. We need a proper renegotiation.”