Downing Street has slapped down the EU for referring to Gibraltar as “a colony of the British Crown” in proposals to allow UK citizens visa-free travel after Brexit.

In regulations published on Friday, the status of Gibraltar is also referred to as “controversial”, as Spain has a claim on the Rock’s sovereignty.

Theresa May’s official spokesman said the language was “completely unacceptable”.

He told reporters: “Gibraltar is a full part of the UK family, this will will not change due to our exit from the EU.”

The row over the overseas territory, which has been simmering throughout Brexit negotiations, flared up at a critical time as the prime minister seeks concessions on the Irish border backstop.

May has said she wants to change the Brexit withdrawal agreement to either time-limit or scrap the backstop, or give the UK a unilateral exit mechanism from it.

But there have been fears that Spain could use any reopening of negotiations to revive its bid for joint sovereignty of Gibraltar and seek concessions from the UK.

The backstop insurance policy to maintain a soft Irish border in all circumstances has sparked major opposition from Tory Brexiteers and the Democratic Unionist Party (DUP) that props up May’s minority government.

They fear it could trap the UK in a customs union forever and object to placing Northern Ireland under different regulations to the UK.

The PM this week, however, managed to stitch together a Commons majority for her Brexit plan after backing an amendment from Sir Graham Brady, chair of the Tory backbench 1922 committee, calling for the backstop to be replaced by “alternative arrangements”.

A plan put forward in the so-called ‘Malthouse Compromise’ between Remain and Leave Tory factions is now being studied by the government.

It would involve using technology, a system of mutual recognition of regulations, and customs checks away from the Irish border to replace the backstop.

May’s spokesman said: “There were meetings in relation to that yesterday and there will be further meetings with that group in relation to exploring the proposals they have put forward.”

He rejected suggestions that the plan amounted to the maximum facilitation – or ‘max fac’ – proposals already rejected by the government last year.

“I think that’s the wrong way of looking at it because you saw subsequent to that, in the joint agreement and the withdrawal agreement, a commitment from both sides to looking at alternative arrangements,” he said.

“I think we have always been clear that that’s work we are keen to take place.”

Meanwhile, International Trade Secretary Liam Fox became the latest cabinet minister to suggest Brexit may need to be delayed if there is not time to pass the relevant laws before the March 29 withdrawal date.

Speaking in Westminster, Fox said: “There would be a huge difference between an extension to Article 50 because we hadn’t reached an agreement, or a short delay because we had reached an agreement and needed the legislation to implement it.

“We can get our domestic legislation through if we quickly reach an agreement with the European Union and that’s in everyone’s interest.”