A Spanish cabinet minister visited Gibraltar for the first time in more than 300 years on Tuesday, but Madrid insisted his trip did not change its claim to the British territory.
Foreign minister Miguel Angel Moratinos was jeered by Spanish nationalists shouting "resign" as his motorcade crossed the narrow border before driving to a hotel where he was met with a brief handshake by Gibraltar's chief minister Peter Caruana.
British foreign minister David Miliband arrived later.
Today's meeting was part of ongoing talks between Spain, Britain and Gibraltar to work closer on practical issues, a push that has already led to lighter border controls and direct flights between Spain and Gibraltar.
However Mr Moratinos's visit only happened after a last-minute deal to avoid discussion of a Spanish-drafted EU document that marked all waters around the peninsula as Spanish - leading the self-governing territory's angry government to challenge it in the European Court of Justice.
Tempers were frayed further when Spanish Civil Guards boarded several boats in waters traditionally controlled by Gibraltar, and Mr Caruana responded by telling boat owners to resist and fire distress flares if challenged.
Britain seized the outcrop at the southern tip of the Iberian peninsula during the War of the Spanish Succession in 1704, and it was formally ceded to Britain in the Treaty of Utrecht nine years later. Spain has always demanded the return of the Rock - a strategic gateway to the Mediterranean.
Earlier, Mr Moratinos flew to the southern city of Jerez and drove 120 km (75 miles), rather than use Gibraltar's airport which is built on land Britain seized after Utrecht was signed and which Spain contests separately.
Spain said Mr Moratinos's visit in no way altered its claim.
"We and the United Nations consider it a territory subject to de-colonisation. We believe the only solution is its return to Spain," a spokesman for Spain's foreign ministry said, adding that land next to the frontier had been illegally occupied.
British prime minister Gordon Brown's spokesman said Britain's position was similarly unchanged. "We would not enter into arrangements under which the people of Gibraltar would pass under the sovereignty of another state against their wishes."
A referendum proposing joint sovereignty in 2002 was rejected by 99 per cent of residents living on the strip of land twice the size of New York's Central Park.
The three sides have already held meetings in London and Cordoba, Spain. Madrid agreed to Gibraltar's presence at the meetings only on condition they focus on co-operation since Spain only recognises Britain, and not Gibraltar, as a partner in talks on sovereignty.
Reuters