Kent MPs Charlie Elphicke and Craig Mackinlay both voted to keep the no-deal option open, saying that it was to the UK's advantage in its negotiations with the EU.
"In the light of our own legal analysis and others we do not recommend accepting the government's motion today", William Cash, a senior pro-Brexit Conservative Party lawmaker said.
If you're thinking that kind of governmental gridlock sounds like a potential general election trigger...
Supporters say it allows Britain to control immigration and take advantage of global opportunities, striking new trade deals with the United States and others while keeping close links to the European Union, which, even without Britain, would be a single market of 440 million people.
European Union chief negotiator Michel Barnier today warned "the risk of no deal has never been higher" and that it could happen "by accident".
"The impasse can only be solved in the #UK. Our "no-deal" preparations are now more important than ever before".
In the meantime, the pound has a long way to recovery against the dollar - especially since a no-deal Brexit is not fully off the table.
Scottish Secretary Mr Mundell said: "I've always opposed a no-deal Brexit".
PM Theresa May leaves 10 Downing Street ahead of the vote on delaying Brexit
After the 149-vote rejection of her Withdrawal Agreement on Tuesday, Mrs May suffered a second defeat in as many days when MPs backed a cross-party amendment rejecting a no-deal Brexit under any circumstances. "Between those very unpleasant choices, I think no Brexit is the bigger risk". The deal we've negotiated is the best and only one available.
"Voting for it will not end uncertainty, but drag this out for years to come".
Supporters say it allows Britain to control immigration and take advantage of global trade opportunities, while keeping close links to the EU.
To some Parliamentary observers, the proceedings sounded a death knell not only for May's plan - but perhaps her leadership. If that is the case, there will be another vote on Thursday to determine whether the Brexit should be postponed.
The parliamentarians will vote on a motion put forward by the government after losing the vote on the deal, which will ask them whether the United Kingdom should leave the union without a deal.
For GBP traders, however, a vote Thursday on whether to ask the European Union for an extension of the March 29 deadline could be more important. A spokesman for Corbyn said May's plan was no longer credible and it would "not be right" to ask the public about it after it was rejected twice by the MPs.
If no deal was agreed by March 20, "then it is highly likely the European Council at its meeting the following day would require a clear goal for any extension, not least to determine its length, and any extension beyond 30 June 2019 would require the United Kingdom to hold European Parliament elections in May 2019", the motion said. While EU leaders indicated minimal interest in renegotiating the basic terms of the agreement, the changes May was able to extract from Brussels were put to a second vote on Tuesday, which Parliament also shot down.
"The options before us are the same as they always have been".