It is the third time the so-called grace period has been extended as the two sides continue to try to find permanent solutions to the border problems caused by the Northern Ireland Protocol. The second extension was agreed in June but was due to expire at the end of this month.
Brexit minister Lord Frost said the Government will "continue to operate the protocol on the current basis".
It is unclear how long the extension will last, but Lord Frost said "reasonable notice" will be given to businesses in the event the arrangements were to change.
He has told Eurocrats that setting another hard deadline would be unhelpful. An extra three-month extension would risk creating huge uncertainty for firms around the crucial Christmas period.
The protocol, agreed as part of the Brexit deal, requires checks on goods travelling from Britain to Northern Ireland to be carried out at ports in order to avoid the return of a land border with the Republic.
But it has caused disruption to trade and angered unionists who have demanded the rules be scrapped, arguing they create a barrier between Northern Ireland and the rest of the UK.
Boris Johnson has repeatedly called on Brussels to renegotiate the protocol, but the bloc has ruled out making major changes.
The grace period delays the introduction of checks in a variety of areas but one of the most contentious is on the export of chilled meat to Northern Ireland.
EU rules would effectively ban those exports but the current grace period allows shipments to continue and provides more time to find a permanent fix.
Ireland's deputy prime minister Leo Varadkar had said he expected an extension to the current grace period.
He said: "I think there is a high probability that it will happen, we are certainly open to it."
Mr Varadkar said he had expected the EU to agree to an extension in order to allow "deep and meaningful" talks about the protocol.
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