Spanish divers filmed themselves wafting Spanish flags underwater as they inspect and measure concrete blocks dropped by Gibraltar authorities to form the hugely controversial reef.
The video, which was released on Friday, was widely shared via Twitter.
— VictorSanchezdelReal (@sanchezdelreal) August 23, 2013
"The act of diving itself constituted a serious violation of British sovereignty but this apparent interference with the reef is a new and worrying aspect," said Gibraltar Governor, Sir Adrian Johns, according to AFP.
Both Spain and Gibraltar claim ownership of these particular waters around the 6.8 square mile territory. The 74 blocks were dropped last month, ostensibly to protect marine life, but which Spain says prevents its fisherman from using the water.
The Gibraltar government said in a statement: "Her Majesty's Government of Gibraltar notes the incident of executive action taken by the Guardia Civil in British Gibraltar Territorial Waters in the area of the new artificial reef.
"The matter of this serious incursion will not assist in de-escalating the present tensions."
Since the diplomatic spat began Spain has imposed strict checks at the border with Gibraltar, creating hours-long queues.
The European Commission is to send a fact-finding mission to Gibraltar to investigate controls at the border.
CORRECTION: An earlier version of this story said the divers were Spanish Police. They are not.