Prime Minister Tony Blair and his Spanish counterpart Jose Maria Aznar were reluctant to reveal the depth of their discussions on Gibraltar's future.

Following the meeting in Downing Street, Mr Blair said talks about the Rock between the two nations would continue in "a positive and sensible" atmosphere.

As negotiations like this go on you do get to the difficult point and we are at that point at the moment."

Tony Blair's spokesman

But when questioned further he insisted he really had "very little to add".

Mr Aznar rebuked a reporter for suggesting the negotiations were in a "deepening crisis".

Instead, he stressed that the situation had been discussed in a "positive and constructive" framework.

The pair faced the media after a two hour meeting which followed a series of mass protests by residents of the British colony, who are overwhelmingly opposed to a deal on shared sovereignty.

'Fruitful discussions'

Mr Blair said: "Of course we discussed the issue of Gibraltar where we agreed that the talks would carry on and indeed they have been carrying on in a positive and sensible atmosphere and those talks will continue."

Mr Aznar said the talks had been "fruitful", but was unwilling to add any more about the contents of the discussions.

But when pressed about the "crisis", he retorted: "Quite honestly, I don't think it is appropriate to use the term crisis to describe the situation.

Mr Aznar is said to be close to Tony Blair

"We have had this issue on the table since 1713.

"We have been talking about the situation, but we have talked in a positive and constructive frame and we are going to continue to talk in those terms.

"We know what problems still have to be resolved. We are also fully aware of the difficulties we all face in resolving those.

"We do of course hope that our conversations will continue."

Outstanding issues

The two governments are keen to reach a compromise, but "real differences" emerged during negotiations between British and Spanish officials last week.

Spain fears that Britain's demands for a 'durable' deal based on a referendum of Gibraltar's inhabitants will lead to a 'no' vote whose effects will last for years.

Mr Blair's official spokesman insisted the bilateral talks were on track, saying they were "exactly where we expected to be at this time in the negotiations".

Jack Straw was given a hostile reception

The spokesman said that with such an important issue it was down to the two leaders to try and resolve the outstanding issues.

He added that the talks on Monday were seen more as "an interim staging post rather than make or break".

The prime minister's official spokesman said difficulties were inevitable as the self-imposed deadline for agreement of early to mid-summer approaches.

Earlier, Gibraltar's first minister Peter Caruana warned that residents might suffer a "loss of enthusiasm" for playing host to UK military bases if their status was changed.

But UK Foreign Secretary Jack Straw continues to rule out any joint sovereignty deal without the consent of Gibraltarians in a referendum.

The meeting was being held as a poll showed three out of four MPs believed Gibraltarians should be allowed to decide their own future.

'More frustration'

Conservatives have backed the calls of those living in the colony to have the talks called off.

Shadow foreign secretary Michael Ancram said the two prime ministers' words told the public nothing more about the talks.

"This will cause nothing but consternation and further frustration in Gibraltar and is a disgraceful abdication of Britain's responsibility to them," said Mr Ancram.

A series of full-page advertisements appeared in British newspapers over the weekend, urging Britons to support the Rock's bid to avoid joint sovereignty.

Mr Blair and Mr Aznar's meeting was dominated by immigration concerns but they also discussed the war against terrorism, the Middle East and the relationship between Russia and Nato.