Crossbench peer Lord Hannay of Chiswick accused senior Eurocrats of being "thoroughly unhelpful" in demanding progress on a swingeing exit payment before discussions of a trade deal can begin.
His comments came after MEPs in Strasbourg on Wednesday backed the European Commission's plan for dealing with the exit terms first.
Lord Hannay, who supported Britain staying in the EU in last year's referendum on the country's membership, argued there was broad support in Parliament for "the Government's view that the negotiation on all these matters should go ahead without further delay".
He pressed the Government to say what steps were being taken with the EU "to soften their unfortunate attachment to a sequential approach".
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The Government's view that the negotiation on all these matters should go ahead without further delay
Lord Hannay of Chiswick
Responding for the Government, Baroness Goldie said the two-year time frame for the negotiations, following the triggering of the Article 50 exit clause, would "focus minds".
Lord Hannay spoke out in the House of Lords ahead of a debate on the expected exit divorce payment, which has been estimated at up to £52billion.
A report from a committee of peers recently reported that the EU had no legal grounds to force the UK to pay a divorce bill.
But in the debate today, members on the committee warned that if the Government wanted goodwill from EU countries and a deal on access to European markets, reaching a divorce agreement was important.
Lord Hannay accused senior Eurocrats of being 'thoroughly unhelpful'
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Committee chairwoman and Lib Dem peer Baroness Falkner of Margravine said Britain's break from Brussels would be "watched around the world".
She added: "The measure of the UK's reputation as a future partner in deals around the world will be dependent upon how the UK behaves in ending this relationship."
She went on: "No amount of legal posturing could convince future partners who do deals with us that we would be reliable partners if we left the EU table without paying our due bill."
Former Cabinet secretary and independent crossbencher Lord Butler of Brockwell warned the UK had much to gain by getting an agreement and much to lose without one.
Lord Butler said "any reasonable claim" by the EU "will not amount to anything like" the 60 billion euro threatened by negotiators.
Baroness Goldie said the two-year time frame for the negotiations would 'focus minds'
He added: "Leaving aside the legal aspects, UK negotiators really don't have a great deal to fear from negotiations on this subject."
In a "reasonable world" it should be possible to make sufficient progress to open the way for talks on a future trade relationship.
Lord Hannay criticised the committee for accepting "so uncritically" the legal opinion that in the absence of any deal the UK would have no financial obligations to the EU.
"That is only one legal opinion among many," he said. "It could only be settled in a court of law and it would be exceptionally unwise if the Government went down that road."
The "collateral damage" from doing so – economic, political and trade-wise – would be "massive," Lord Hannay warned.
There was no "get out of jail free card", he said.
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Continued cooperation with the EU to tackle terrorism and international crime.
Opposition spokesman Lord Tunnicliffe said: "Labour is clear that the UK is a responsible partner.
"We have made commitments to our European colleagues and whilst we will need to look at the figures in detail it is only right that this country recognises and meets its obligations."
He added: "We would struggle to strike deals with new partners if the UK is viewed as unreliable and untrustworthy.
"In this sense, the legal reality is secondary to the political and economic reality."
Responding for the Government, Lord Young of Cookham said: "We are confident that at the end of the day Britain can secure a deal that works for us and works for the EU."
He added: "We do want to play our part in making sure that Europe remains strong, prosperous and able to lead in the world, projecting its values and defending itself from security threats.
"We want a deep, special partnership taking in both economic and security cooperation."