Britain should openly threaten Spain with legal action over its treatment of Gibraltar and set out a "more robust" response to incursions into British waters, MPs said as they warned ministers it was time to "get off the fence" in the diplomatic spat.
An influential Commons committee said the Foreign Office had been too timid in responding to what it said was Madrid's deliberate and politically-motivated use of border delays as a means of "coercion", "cavalier" raids by vessels and ramped up rhetoric.
A cautious policy of trying to de-escalate tensions with a key ally was understandable but had so far had "little discernible effect" beyond frustrating residents of the British overseas territory over the lack of firm action, t he cross-party foreign affairs committee said.
And with Gibraltarians now feeling "under siege", the Government should set out what "naval and police options" it plans to take to repulse incursions and tell Spain that it has six months to ease the situation or be taken to the European Court for breach of its EU treaty obligations.
The Rock has been a long-running cause of friction, with Spain maintaining a long-standing challenge to Britain's sovereignty over the territory which it has held since 1713.
Tensions flared again last summer when Madrid imposed strict border controls in retaliation for the creation of what Gibraltar says is a concrete "reef" but Spain insists was a deliberate move to block its fishing fleet.
There have been severe delays at the crossing between Spain and Gibraltar and more than 600 cases of Spanish government vessels unlawfully entering British territorial waters around Gibraltar since the start of 2013.
"The behaviour of Spain toward Gibraltar is unacceptable," the MPs said. "A Nato and EU ally is, as a matter of policy, deliberately impacting the economy of a British Overseas Territory.
"It is time for the Government to get off the fence and take a tougher line.
"We have no doubt that delays imposed by Spain at the border with Gibraltar are politically motivated, and that the border is being used as a means of coercion.
"The Government is right to look to the European Commission to address this matter, but it should state publicly that it will take legal action against Spain in the European Court if there is little improvement in the next six months."
Article 259 of the Lisbon Treaty allows an EU member state to pursue through the European Court of Justice another which it believes has " failed to fulfil an obligation under the Treaties".
Ministers should also set out which "naval and police options it has identified and... intends to pursue" to defend the waters off The Rock.
The Spanish ambassador has been summoned to the Foreign Office four times since the current government in Madrid took office in December 2011 to hear protests about incursions and Brussels has sent inspectors to the crossing.
But the MPs said diplomatic protests were only being made weeks after the event " robbing them of all force" and giving the impression officials were simply "going through the motions".
The ambassador should be hauled in more frequently, all incidents responded to in no more than seven days and Commission officials despatched to the crossing again at the shortest possible notice to both sides, the report recommended.
Pressure should also be exerted on Spain - which is guilty of hypocrisy at best over its own claims on overseas territories - by threatening to drop UK support for its ambitions such as gaining a place on the United Nations Security Council, the committee said.
The Government was also criticised for doing little to tackle an "unacceptable" ban on cross-border military movements even by Nato allies, saying it was "not appropriate for the UK to simply work around it".
There was "merit" in the idea of Gibraltar seeking to remove border controls with Spain by joining the EU's Schengen no-borders area, they said, though there could be "considerable legal and economic implications" as in Brussels terms it is part of the UK, which is not a member.
Committee chair Sir Richard Ottaway said: "The behaviour of Spain toward Gibraltar is unacceptable.
"We have a situation where a Nato and EU ally is deliberately impacting the economy of a British Overseas Territory.
"But with the FCO taking far too long to register diplomatic protests, we are giving entirely the wrong impression to Spain about how seriously the UK takes these issues."
The report was published as Europe Minister David Lidington made a visit to Gibraltar but the MPs said that in the light of what the Gibraltarians had gone through over the past year there should be " a high-level visit" within the next few months.
A Government spokesman said: "This Government has never been on the fence when it comes to Gibraltar.
"We've been absolutely clear that we will never enter into arrangements under which the people of Gibraltar would pass under the sovereignty of another state against their wishes. And we protest each and every illegal incursion by Spanish state vessels into Gibraltar territorial waters."