Tánaiste Simon Coveney said the proposal for Northern Ireland to operate under a different customs regime to Ireland presented "legal and technical" problems.
"Despite this paper saying they want to avoid customs checks they do raise the prospect of customs checks somewhere, not just in premises and businesses, and we think that's going to be a real problem," he said.
The Tanaiste said that would potentially undermine the commitment for no border infrastructure.
Mr Coveney said while the proposals as they stood were not acceptable he expressed hope they could provide a "stepping stone" to a final "landing zone" for a deal.
He said he hoped the UK's plan could be developed into something that was "fit for purpose".
