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The European Commission decided to send a "fact-finding mission" to Gibraltar to investigate the dispute between Spain and Britain over extra border checks on the Spanish side.
The team is to be sent as soon as possible, according to a phone conversation between European Commission President Jose Manuel Barroso and Spanish Prime Minister Mariano Rajoy on Monday.
Barroso also urged Spain and Britain to solve the dispute "in line with their common membership in the European Union." On Sunday, dozens of Spanish fishing boats confronted British police vessels.
The latest conflict over the territory, situated on the southwest coast of Spain, began earlier this month after authorities from Gibraltar dumped around 70 large concrete blocks in the sea.
The move was thought to be designed to prevent Spanish fishermen from overfishing in Gibraltar's territorial waters. Spain saw the matter as a direct affront and responded with tighter border controls, causing delays of between three to four hours.
Last Monday, British Prime Minister David Cameron called the beefed-up controls by Spain "politically motivated and disproportionate."
Although Spanish Prime Minister Mariano Rajoy and Cameron held a phone conversation to try and calm the situation, Spain's Foreign Minister Jose Garcia Margallo vowed to take the case to the United Nations in response to reports that a fleet of British warships was enroute to Gibraltar to take part in "routine operations."
He also proposed Spain and Argentina present a "united front" over Gibraltar and the Falkland Islands, the British South Atlantic colony which Argentina claims as its own.
Margallo added Spain was considering imposing a charge of 50 euros (around 66.5 dollars) for crossing the frontier between Spain and Gibraltar.
The British government and the Foreign Office responded in a statement that "the people of Gibraltar have repeatedly and overwhelmingly expressed their wish to remain under British sovereignty."
Located on the southern end of the Iberian Peninsula at the entrance of the Mediterranean, Gibraltar has an area of 6.7 square km and a northern border with Spain.
Spain ceded sovereignty of Gibraltar to Britain in 1713, but has persistently sought to regain the tiny southern territory.
