He told the MailOnline: 'Spanish Patrol Boat P77 (Infanta Christina) this afternoon made an incursion into Gibraltar territorial waters and was challenged by the Royal Navy's HMS Scimitar.
The row between Britain and Spain over the post-Brexit status of Gibraltar, a British territory attached to mainland Spain, offers a glimpse of the potentially turbulent negotiations facing Britain now it has begun its formal separation from the European Union.
The Spanish Foreign and Defense Ministries both admitted the "Infanta Cristina" was in the zone, but insisted it was "carrying out a routine vigilance operation in waters which are under Spanish sovereignty".
Asked whether Brexit negotiations launched last week are off to bad start due to the dispute about the British territory, Michel Barnier said Tuesday "keep calm and negotiate".
Spain has long disputed British sovereignty over the land, which has been held by the United Kingdom since 1713 and now has the status of a British overseas territory.
Over the weekend, European Council President Donald Tusk published a letter containing the bloc's guidelines for the split with Britain, or Brexit, a process that could take as long as two years.
The Spanish government said it had been "surprised by the tone of comments coming out of Britain" about Gibraltar.
Downing Street has explicitly ruled out that Brexit Britain will go to war with Spain over Gibraltar - an extraordinary step made necessary after it backed a former Conservative party leader's sabre-rattling comments over Britain's big Mediterranean rock.
'What we're doing with all European countries in the European Union is sitting down and talking to them, ' she said.
"If the dispute closes the frontier, this will not only hurt the Gibraltarian economy it will also damage what is already the damaged economy of Andalusia - one of the poorest regions of Spain", said John Fletcher, Pro Vice-Chancellor Research and Innovation at Bournemouth University in the United Kingdom.
Theresa May and Foreign Secretary Boris Johnson have moved to reassure the people of Gibraltar that the territory will remain under British control.
The gambling industry in Gibraltar is estimated to employ around 3,000 people, with another 1,000 indirectly depending on the sector for employment, many of them living on the Spanish side of the border.
Spain has a long-standing territorial claim on Gibraltar, which has been held by the United Kingdom since 1713 and has the status of a British overseas territory.
Johnson said Monday that Gibraltar's sovereignty "is not going to change and can not conceivably change without the express support and consent of the people of Gibraltar and the United Kingdom". In a 2002 referendum, 99 per cent of the populace voted against the idea of Britain and Spain sharing sovereignty over the territory.
Shortly after May triggered Brexit, the EU issued a nine-page document that laid out its draft negotiating guidelines for the 27 countries remaining in the union.