Chief minister Peter Caruana has refused to join in talks with Britain and Spain about shared sovereignty of the colony.

He claims any deal would be against the wishes of the vast majority of residents and amount to a "betrayal" of their democratic rights.

In a television address to Gibraltarians on Thursday, he said the referendum would prove the Rock's 20,000 voters would not accept any agreement diluting their British status.

Access to base

The move will be a blow to UK Foreign Secretary Jack Straw, who has promised to consult the people of Gibraltar before any deal with Spain is reached.

Mr Blair faced questions from the media

But Mr Caruana said: "Our referendum will constitute the freely and democratically expressed wishes of the people of Gibraltar.

"Any attempt to deny it will lack democratic and political credibility."

Shadow Foreign Secretary Michael Ancram is supporting Gibraltar's decision to hold its own referendum.

The announcement comes as Tony Blair confirmed Spain could be given access to the UK military base on Gibraltar.

The prime minister insisted Britain would retain sovereignty over the facility.

Mr Blair's comments were welcomed by Spain's foreign minister as a sign that talks over the UK colony's future were "not dead".

But they are likely to provoke further outrage in Gibraltar, where the majority of residents want to retain UK citizenship.

'For Britain to decide'

Earlier this month, residents took to the streets in protest after the UK confirmed it was willing to share sovereignty of Gibraltar with Spain.

I think it's a sign of goodwill in the negotiations

Ana Palacio, Spanish foreign minister

The Tories have said they would reverse any decision over Gibraltar reached by the government "unless convinced that there has been consent freely given".

Speaking at the second in a series of televised news conferences in Downing Street on Thursday, Mr Blair said Gibraltar's military base could be converted to a Nato base.

That would mean all Nato members, including Spain, would have access.

"It is for us to decide, as Britain, what happens with this base and there can't be any aggregation of that principle at all."

'No change'

Mr Blair said no decision had been made on the base's future.

Spain and the government of Jose Maria Aznar have the opportunity to reach an historic landmark and solve this dispute

Peter Hain, Europe Minister

"If we decide to have that as a Nato base - if there are Nato people involved there - then there is no reason why that shouldn't involve any Nato country," he said.

"The point is that the issue that arose during the course of these discussions was would we be sharing the sovereignty of this base with Spain and the answer to that is no."

He insisted the move did not represent a change of policy.

"It (the base) remains under British control.

"If it is for Nato purposes or any other purposes, it is only with British consent and British sovereignty," he told reporters.

'New proposals'

But his words were welcomed by Spain's new foreign minister Ana Palacio.

"We'll wait for Britain to put their new proposals on the table before answering," she said.

"But I think it's a sign of goodwill in the negotiations.

"It's also proof that the talks have not broken down."

Mr Blair's comments followed the disclosure by Europe Minister Peter Hain in an interview with the Spanish El Pais newspaper that the base could become a Nato facility.

The Foreign Office said there had been no change in the position regarding use of the base.