Carwyn Jones has said there is “some way to go” before the Welsh Government can support the Brexit bill transferring EU law to Parliament.
It follows what the first minister called a “useful” first meeting with Damian Green, Theresa May’s deputy.
Mr Jones has accused the UK government of planning a Brexit “power grab”.
Mr Green said the talks in Cardiff had been a “step in the right direction” with the need to focus next on areas that needed a common UK approach.
Relations between the two administrations have been strained, with the UK government warning Mr Jones not to “undermine Brexit talks” as he has accused them of trying to take power back from Cardiff Bay.
There have also been concerns that a joint ministerial committee (JMC) – for the Scottish, Welsh, UK and Northern Ireland governments to seek a UK-wide approach to Brexit – has not met in six months.
Monday’s meeting, the first time Mr Jones has met the first secretary, was aimed at addressing concerns about the repeal bill – also known as the European Union (Withdrawal Bill) – which will be debated by MPs on Thursday.
It aims to ensure the rules currently set by European law still apply in the UK after Brexit, while giving the UK Parliament power to change them.
Mr Green was accompanied by Welsh Secretary Alun Cairns, while Mr Jones was joined by the Welsh Government’s Finance Secretary Mark Drakeford.
Mr Jones and Scotland’s First Minister Nicola Sturgeon have threatened to block the repeal bill, saying it does not return powers to devolved administrations as promised – rather returning them “solely to the UK government and parliament” – and imposes new restrictions on Scotland and Wales.
Following the meeting, the first minister tweeted that he had a “useful first meeting” with Damian Green, but added there was “some way to go” before his government could support the Brexit Bill.
Mr Green said: “The talks today were conducted in a constructive spirit and were a step in the right direction.
“We both agree that it is vitally important to protect the internal UK market and to avoid making things more difficult and expensive for Welsh companies doing business across the UK.
“To achieve this we will need to adopt a UK-wide approach on certain issues.
“The next step is to discuss those areas that need a common UK approach for the good of businesses and consumers in Wales and across the United Kingdom.
“It is critical that work starts now.”
Mr Cairns added: “More powers will certainly come to Wales as part of this process and that will be an important incentive in pushing us towards an agreement.
“There is a significant job of work to be done and we must keep focus on the outcomes we want to achieve.
“We will keep talking and I am confident we can reach an agreement that works for all parts of the UK.”
Analysis by Nick Servini, BBC Wales political editor
There have been plenty of warm words ahead of the talks but it is difficult to see where progress can be made in settling the disagreement between the UK and Welsh governments.
The UK government has focused on the importance of continuity for trade in trying to persuade critics to support the repeal bill.
But it will also be under pressure to take the heat out of this particular row on the home front when it is facing so many difficulties in the main Brexit negotiations abroad.
The Welsh Government will be acutely aware of that, and is pushing for concessions to give it more influence in this hugely complex process.
The harder Carwyn Jones pushes, the greater the accusation from political opponents that he is trying to block Brexit.