He said: “It may be that some countries in the EU would need to hold a referendum.”
Speaking of a “worst case” scenario the foreign secretary added: “If a referendum were held .. if treaty change were presented and repeatedly failed to get through referendums in a single country, in the end there would have to be a way to get though the impasse.
“But in the meantime we would have to rest on the international law which exists between member states.”
The Minister added that a number of member states have raised “objections of principle against what we are proposing about access to welfare benefits” and warned it would be the “most difficult issue” to get agreement on.
Eurosceptic MP Kate Hoey said Mr Hammond’s comments show the UK will be “back to square one” if another EU nation decides to vote down proposals.
And Graham Stringer, a Labour member, added: “The whole thing is flawed.
“Other countries might vote it down as governments or they might vote it down as peoples. The government is asking for very little and they have no control over whether even that will be adhered to.”
Mr Hammond also warned that leaving the EU would have “very significant consequences” for the UK and EU.
He said: “The exit of a major country, the second largest economy in the EU – would have potentially very significant ramifications for the EU and what its future looks like.
“But a British exit would also have very significant impact on the UK, it would require us to undo decades of thinking about how we drive and power the UK economy, how we ensure the standards of living of British people and how we protect our national security.
“It would require a radical rethink and I’m sure certainly in the short term it would have some very negative impacts on the UK.”