Gibraltar has accused Spain of manipulating the European Council for its own political interests.
A draft document on the EU's Brexit strategy said no agreement on the EU's future relationship with the UK would apply to Gibraltar without the consent of Spain, giving it a potential veto.
But Gibraltar's chief minister Fabian Picardo said this was "unacceptable".
Conservative MPs in the UK have warned that the sovereignty of the UK overseas territory is non-negotiable.
MP Jack Lopresti said Spain was using Brexit as "a fig leaf for trouble making", while fellow Tory Bob Neill tweeted "no sell out".
I don't know if the EU are just pushing their luck and waiting to see what happens or are really determined to get this bit of dictatorship accepted by us. If it's the latter I suggest we tell them to go stuff themselves and walk away right now and be done with it. We can't negotiate with people intent on blackmailing us.