The former minister warned the Tory party would split if the Prime Minister was “not prepared to confront the ideologues” in her Cabinet whose policies would bring economic ruin.
If that happened, Ms Soubry said, it was possible she would leave to work with “like-minded people who want to save our country from such an appalling fate”.
“Mrs May is making a great mistake if she allows her policy to be dictated by the Brexit ideologues,” Ms Soubry said.
The MP for Broxtowe, in Nottinghamshire, said she was often asked two questions: would she ever leave the Conservatives over Brexit and “has that moment arrived yet”?
In an article for the Mail on Sunday, she wrote: “The answer to the first question is “it is not impossible”; the answer to the second is “no”.
“But I would be betraying my principles if I did not make it clear that country must always come before party.”
The warning comes after James Chapman, former chief of staff to Brexit Secretary David Davis, revealed that two Cabinet ministers had shown interest in his call for a new political party to fight EU withdrawal.
They were “contemplating this disaster” of the Brexit negotiations, knowing they would never again be in power if withdrawal went ahead as planned.
And a number of Shadow Cabinet ministers had also been in contact because “they understand there is an enormous gap in the centre now of British politics”.
In the article, Ms Soubry warned the fate of both the country and the Conservative Party would be decided “in the next few months”, as the exit talks resumed.
“There are sensible, moderate wise owls in the Cabinet and on the Conservative back benches,” she wrote.
“Mrs May must waste no time in taking on the ‘Hard Brexiteers’ and making it clear that she sides with responsible Cabinet Ministers – such as Chancellor Philip Hammond – who appreciate that we need a sensible Brexit transition period to avoid plunging this country headlong into an economic nightmare.”
And she said: “If the Prime Minister or her successor (in the event of Theresa standing down) is not prepared to confront the ideologues, I gravely fear that the party could split – and that would change Britain’s political landscape completely.”
Ms Soubry added: “There is a sense of resignation among most people who voted Remain that we have to “man up” – even the women among us – and make the most of what we know will be a rotten Brexit.
“But it does not have to be like that. Brexit is a self-inflicted wound; the people of this country hold the knife and they don’t have to use it if they don’t want to. The people, not the hardline Brexiteers, are in charge.”
However, there are enormous obstacles in the way of forming a new political party, particularly after Labour bounced back under Jeremy Corbyn’s leadership at the June election.
Talk of scores of moderate Labour MPs potentially defecting has evaporated and other pro-EU Conservative MPs have dismissed the idea of a breakaway party.