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Spanish workers of the association of Spanish workers in Gibraltar (ASCTEG) and unemployed people pose for a photo as they hold signs in front of the Rock of the British territory of Gibraltar (rear), a monolithic limestone promontory, at the border in La Linea de la Concepcion, southern Spain August 6, 2013.JON NAZCA/Reuters

Spanish Prime Minister Mariano Rajoy has agreed to ease restrictions Spain has imposed along its border with Gibraltar and plans to work with Britain on finding a solution to the growing tensions over the territory, British officials announced Wednesday.

Mr. Rajoy and British Prime Minister David Cameron spoke by phone Wednesday morning amid a growing dispute between the two countries over fishing in waters off Gibraltar, which has been British territory for 300 years. In recent days Spain has held up traffic at the only land crossing and threatened to impose a €50 border fee on travellers.

Spain is furious that Gibraltar has gone ahead with plans to build an artificial reef off its shoreline using dozens of concrete blocks, saying it has disrupted Spanish fishing. Gibraltar has argued that the reef will help replenish fish stocks and it has asked Britain to send in naval ships to back up its claims.

On Wednesday, Mr. Cameron told his Spanish counterpart that "our position on the sovereignty of Gibraltar and its surrounding waters will not change," British officials said. Mr. Cameron "also reiterated, as the PM and Mr. Rajoy had previously agreed, that the issue should not damage our bilateral relations. However there was a real risk of this happening unless the situation at the border improved."

According to British officials, "Mr Rajoy agreed that he did not want the issue to become an obstacle in the bilateral relations and that we needed to find a way to de-escalate the issue. As a next step, the foreign secretary [William Hague] should speak to [Spanish foreign minister José Garcia-Margallo] to discuss a way forward. In the meantime, Prime Minister Rajoy committed to reducing measures at the border. Both leaders agreed that there should be a solution to the fishing dispute."

In statement from his office Wednesday, Mr. Rajoy called the reef building "unacceptable" and urged Britain and Spain to have a dialogue "framed in respect of international, European and national law."

He added that Spain and Britain are "friends and allies" and any dispute should be handled with "honesty and transparency".

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