Brexit minister David Davis and his negotiating team are due in Brussels on Monday for a first full round of Brexit talks.
"Five weeks ago the idea of a transition period was quite a new concept, I think now you would find that pretty much everybody around the cabinet table accepts that there will be some kind of transition," Hammond told the BBC's Andrew Marr show.
"We're into a real process now with the start of negotiations and I think you'll find the cabinet rallying around a position that maximizes our negotiating leverage and gets the best possible deal for Britain."
Hammond said the length of any transition period would depend on how long is needed to get new systems in place to handle areas such as customs and immigration, but it should be a defined period and was likely to need to be at least two years.