Foreign Office minister Mark Simmonds said he wanted to de-escalate the situation but would not put up with "bullying and intimidation" of the British territory at the mouth of the Mediterranean.
Britain summoned the Spanish ambassador yesterday to explain the most serious incursion for months in the waters off Gibraltar, which Spain has long claimed as its own.
A Spanish state oceanographic research ship, backed up by three military Spanish police boats, ignored orders to leave for 22 hours before departing yesterday, coming within 250 metres (yards) of Gibraltar's harbour.
"We constantly review as to whether the Royal Navy's deployment around Gibraltar is accurate. We are reviewing that at this current time as well," Simmonds told parliament in an emergency debate on the incursion.
He said he wanted a "political solution" to the dispute, adding: "We do not believe that gunboat diplomacy and tit-for-tat escalation is in anyone's interest.
"Bullying and intimidation, wherever it occurs, in unacceptable and that is what appears to be happening in relation to Gibraltar."
Spain ceded Gibraltar to Britain in perpetuity in 1713 but has long argued that it should be returned to Spanish sovereignty, and the territory remains a source of diplomatic tension.
There were demands in the British parliament today for the ambassador to be thrown out, calls for "real action", plus comparisons made with Iran and Spain's Franco-era dictatorship.
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