The Spanish Ambassador has been summoned to the Foreign Office to explain why a research vessel ignored Royal Navy requests to leave the waters around Gibraltar for more than 20 hours.
Foreign Office Minister David Lidington condemned the "provocative incursion" into Gibraltan waters, which involved a Spanish state research vessel the RV Ramon Margalef. The ship has now left Gibraltan waters after 22 hours after being met by two Royal Navy fast patrol boats.
Spain's ambassador, currently Federico Trillo, has now been summoned three times since 2011 by the Foreign Office in response to Spanish vessels repeatedly crossing the border.
Mr Lidington said today: "I strongly condemn this provocative incursion and urge the Spanish government to ensure that it is not repeated. We stand ready to do whatever is required to protect Gibraltar's sovereignty, economy and security.
"We believe that it is in the interests of Spain, Gibraltar and Britain to avoid incidents such as this that damage the prospects for establishing dialogue and cooperation.
"We remain confident of UK sovereignty over the whole of Gibraltar, including British Gibraltar Territorial Waters, and will respect the wishes of the people of Gibraltar."
Mr Lidington said the crew of the vessel told British ships it was conducting survey work "with the permission of the Spanish authorities and in the interests of the European Community".
In a statement, the Ministry of Defence said two Royal Navy fast patrol boats, the HMS Sabre and HMS Scimitar, had prevented the RV Ramon Margalef from deploying its oceanographic surveying probe after issuing "appropriate warnings".
A spokesman said: "There was no damage to any Royal Navy or Spanish equipment or vessels and no injuries were incurred.
"The actions of the Royal Navy were fully in accordance with Her Majesty's Government's commitment to uphold the sovereignty of Gibraltar with a range of proportionate responses."
The RV Ramon Margalef did not enter Gibraltar's harbour.
Mr Lidington said the waters around Gibraltar were "indisputably British" and highlighted in his statement that the latest clash comes two weeks after "dangerous manoeuvres" by a Spanish Guardia Civil vessel in the vicinity of Royal Navy vessels in British waters put lives at risk and resulted in a minor collision.
He said Spain was party to the United Nations Convention on the Law of the Sea and was fully aware of the proper legal position.
The Minister added: "Over the past two years, increased the level of unlawful incursions by Spanish State vessels into British territorial waters from around five per month to around 40 per month."
Speaking earlier, Prime Minister David Cameron's official spokesman told a regular Westminster media briefing: "Our view about the importance of the territorial integrity of our sovereign waters is unchanged.
"It is very important and we have communicated that to the Spanish Government.
"Our relations with the Spanish Government of course are important to us and we work with them in a number of areas, but where we have differences we make these very clear and we will continue to do that."
Labour MP Jim Dobbin earlier asked whether a Foreign Office Minister would address the Commons tonight on the latest developments.
Deputy Commons Speaker Lindsay Hoyle said: "I've been given no notification of a statement to be made but I'm sure the Foreign Office is listening very carefully to what you've just said on such a serious incident."
Before news of the latest incident broke, former army colonel-turned-Conservative MP Bob Stewart insisted Britain should send major combat units to train in Gibraltar more often if it is determined to defend the territory.
Speaking in a Westminster Hall debate earlier today, Mr Stewart said the Government should use the Rock as an exercise base for a roulement infantry company for six weeks at a time rather than sending troops on short training tours to Kenya or elsewhere.
The Beckenham MP also insisted the Government has to be stronger in its response to Spanish actions against Gibraltar and do more to express Parliament's view that it is fed up with what is happening to the territory's people.
Foreign Office Minister Mark Simmonds said the UK had been strong in its response to concerns over border crossing delays and incursions by Spanish vessels into Gibraltar's territorial waters.
But he said measures to de-escalate rather than escalate the situation needed to be found.
During the debate, Mr Stewart said: "If the British Government is determined on defending Gibraltar, why doesn't the British Government make more use of the defence facilities in Gibraltar?
"For example, by sending down more often a roulement infantry company to be based in Gibraltar for perhaps six weeks at a time to exercise there rather than sending it to somewhere like Kenya."
Mr Simmonds replied the regiment plays a very significant and positive role in Kenya.
He continued to Mr Stewart: "We must strike a balance between being forceful, strong, determined to ensure the Spanish understands the UK Government's position.
"We must also ensure that the EU Commission is taking its role responsibly and consistently in making sure that the issues both on the border and in Gibraltarian territorial waters cease, but we must also find mechanisms to de-escalate rather than escalate the situation, which is why we must make sure we get back as soon as possible discussing solutions without negotiating the Gibraltarian sovereignty position at all."
Mr Simmonds told MPs the Government takes seriously its responsibility to protect Gibraltar - including from Spanish incursions into its territorial waters.
He said: "We do not rule out any measures that are necessary to defend Gibraltar and ensure security from a genuine threat.
"We believe that unlawful incursions by Guardia Civil vessels and other vessels of the Spanish state are merely a futile effort and attempt to assert Spain's legal position in respect of the waters. They are not acts of war and they do not weaken or undermine the legal basis for British sovereignty over Gibraltar and British Gibraltar territorial waters."
The European Commission last week found Spain has broken no EU rules by stepping up checks on the border crossing into Gibraltar.
The commission sent a team to investigate after a row broke out in the summer when Spanish authorities tightened frontier controls, allegedly to crack down on tobacco smuggling.
But the move came after Gibraltar had created an artificial reef off its coast, angering Spanish fishermen.
Mr Simmonds said the commission's findings were quite different from confirmation that Spain had acted lawfully.
According to the Foreign Office, Acting Permanent Under Secretary Matthew Rycroft told Mr Trillo that the incursions were "unlawful" and did not change international law or weaken the legal basis for British sovereignty.
Mr Rycroft also highlighted "unacceptable" delays on the border with Spain, which are said to be happening on a "near-daily basis".
A Foreign Office spokesman said: "The European Commission has given Spain clear recommendations which, if implemented, would improve the functioning of the border. The UK expects the Spanish government to act on these recommendations without delay.
"Matthew Rycroft reiterated the UK's commitment to ad hoc talks, as proposed by the Foreign Secretary in April 2012, as a means to work around incompatible positions on format that have previously prevented dialogue."