A defence source said it was likely the first time a Challenger 2 had been disabled by enemy action.
The last time one of the heavily-armoured battle vehicles had been destroyed is thought to have been during friendly fire in Iraq in 2003.
Footage being widely shared on social media shows one of the 14 tanks that the UK gave to Kyiv in January at the side of a road with billowing thick grey smoke and fire emerging from it.
It is unclear how the tank was destroyed but it is understood that the Ukrainian crew in the tank survived the attack.
The footage appears to have been filmed from a car containing Ukrainian armed forces personnel who were looking to flee the fighting.
A defence source told PA: “This highlights the quality of the kit we are giving Ukraine.
“In the tanks Ukraine had at its disposal before Western support, the chances of the crew surviving unscathed were slim to zero.”
The Ministry of Defence said it would not be commenting.
There has been no confirmation of the location but reports have suggested the footage was shot on the southern Zaporizhzhia front where Ukraine’s counter offensive has been focused.
Since the grinding counteroffensive began about three months ago, Ukraine has advanced 4.3 miles in the Zaporizhzhia region, Ukrainian officials claim.
Troops surmounted dense Russian fortifications last week to retake the village of Robotyne.
That was Ukraine’s first tactically significant victory in that part of the country.
The Institute for the Study of War, a think tank, citing geolocated footage, said on Tuesday that Ukrainian light infantry has advanced beyond some of the anti-tank ditches and dense minefields that make up Russia’s layered defences in Zaporizhzhia.
However, it said it was unable to say that the defence was fully breached because no Ukrainian heavy armour has been seen in the area.
Ukraine has adapted its counteroffensive tactics in recent weeks, moving from attempts to bludgeon its way through Russian lines using western-supplied armour to better-planned tactical attacks that make incremental gains, according to the Royal United Services Institute, a think tank.
But even after the change, progress remains slow, the think tank said, with between 700 to 1,200 metres gained every five days.
Prime Minister Rishi Sunak signed-off on handing Ukrainian president Volodymyr Zelensky 14 Challenger 2 tanks at the beginning of the year, ahead of the one-year anniversary of the conflict in February, as he looked to boost Kyiv’s efforts to push back Russian troops.
The move opened the door to other Western nations handing Ukraine tanks, with Leopard 2 tanks given by Germany and other European countries, while the US donated Abrams.
Defence sources said the war in Ukraine was the first time the Challenger 2 was being tested against modern military equipment.