Sterling plunged as Mr Raab walked out of the Cabinet saying he could not “in good conscience” support a deal that broke promises to voters.
Work and Pensions Secretary Esther McVey followed an hour later with a personal attack on the Prime Minister for accepting a deal that failed to meet “the tests you set from the outset of your premiership”.
Suella Braverman, Brexit Minister at the Department for Exiting the EU was next to go.
Northern Ireland Minister Shailesh Vara went at 7.30am with a letter protesting that Mrs May’s terms left the “shackles” to the EU in place.
Another Cabinet minister Penny Mordaunt was tipped to be on the way out after demanding in Cabinet a free vote for MPs on the deal, which would probably kill it. The International Development Secretary is said to have asked to see Mrs May in private.
Ominously, a source close to Michael Gove, the big beast Brexiteer who sided with Mrs May in a Cabinet showdown yesterday, declined to give guidance on his current intentions.
Tory MP Anne-Marie Trevelyan resigned as a PPS or aide in the Department for Education, attacking negotiations “built on the UK trying to appease the EU”.
The resignations came as Mrs May gave a fighting statement in the Commons to try to rally support to her deal.
She looked composed as she told the House: “The choice is clear. We can choose to leave with no deal. We can risk no Brexit at all.
“Or we can choose to unite and support the best deal that can be negotiated: This deal.”
But MPs believed that a dozen junior ministers and ministerial aides are ready to quit, raising the spectre of a morale-sapping rolling series of orchestrated walkouts of the type last seen in 2006 when supporters of Gordon Brown forced Tony Blair to pre-announce his retirement.
The Brexodus from the Government benches raised serious doubts about whether the Prime Minister can deliver the deal she forced through a reluctant Cabinet last night.
By mid-morning the Pound was down 1.4 per cent against the euro and 1.5 per cent against the dollar.
Dominic Raab's career at a glance
Dominic Raab became Secretary of State for Exiting the European Union in July after the resignation of David Davis.
Since the 2017 election he has also held the positions of Minister of State for Courts and Justice and Minister of State for Housing, Communities and Local Government.
The 44-year-old was first elected as an MP in his Esher and Walton constituency in 2010 and was appointed Parliamentary Under-Secretary of State at the Ministry of Justice in May 2015.
He studied law at university and a solicitor at Linklaters in London before he got involved in politics, working as Chief of Staff to David Davis when he was Shadow Home Secretary and Dominic Grieve when he was Shadow Secretary of State for Justice.
As knives were being sharpened on the Tory backbenches, with open calls for a leadership challenge, Mrs May came under stinging attack from one Tory MP.
Brexiteer MP Marcus Fysh tweeted: “I cannot see how a Prime Minister presiding over and pursuing this abject surrender and the worst terms for such in British parliamentary history can with honour remain in post.”
Tory MP Anne Marie Morris, a controversial right winger, plunged the knife into Mrs May by claiming the 48 letters required to force a confidence vote had already been sent to 1922 Committee chairman Sir Graham Brady. This was not confirmed.
The dramatic departure of Esher MP Mr Raab - a rising star on the Right who was brought in to keep Tory Brexiteers on board - was the biggest blow to Mrs May.
In a resignation letter, he said it was “a matter of trust” and said the deal failed to honour the Government’s manifesto promises to the people.
It emerged that he refused to fly over to Brussels after Cabinet last night to seal the agreement.
Mr Raab replaced David Davis who resigned over the Chequers proposals in July. Labour MP Jon Trickett said the Government was “falling apart before our eyes”.
Remain-supporting Tory MP Anna Soubry said his resignation “marks the end of PMs Withdrawal Agreement” and possibly her premiership.
Mr Vara attacked the deal for leaving “the UK in a halfway house with no time limit on when we will finally be a sovereign nation”.
The North-West Cambridgeshire MP and lawyer, who is seen as a centrist Tory, said: “We are a proud nation and it is a say day when we are reduced to obeying rules made by other countries who have shown that they do not have our best interests at heart.”
In her resignation letter, Ms McVey launched a series of criticisms of Mrs May.
The Tatton MP wrote: “The deal you put before the Cabinet yesterday does not honour the result of the referendum.
“Indeed, it doesn’t meet the tests you set from the outset of your premiership....
“It will trap us in a customs union, despite you specifically promising the British people we would not be.
“It also threatens the integrity of the United Kingdom, which as a Unionist is a risk I cannot be party to.
“The British people have always been ahead of politicians on this issue, and it will be no good trying to pretend to them that this deal honours the result of the referendum when it is obvious to everyone that it doesn’t.”
She concluded: “In politics, you have to be true to the public and also true to yourself.
“Had I stayed in the Government and supported this deal with the EU I wouldn’t be doing that.”
Experts said the Pound’s turmoil was linked to doubts about Mrs May’s ability to govern.
James Hughes, chief market analyst at Axi Trader, said: “It seems sterling is now a barometer of the PM’s ability to hold onto her job.”
David Cheetham, chief market analyst at online trading group XTB, said the currency reaction was “reminiscent of the Chequers deal in the summer where initial support from the Cabinet has proved short-lived for Theresa May”.