Ecuador has accused the UK of making a "threat" to enter its embassy in London to arrest Wikileaks' Julian Assange.
Mr Assange took refuge at the embassy in June to avoid extradition to Sweden, where he faces questioning over assault and rape claims, which he denies.
The Foreign Office said it could revoke the embassy's diplomatic status.
In a statement issued as Mr Patino spoke, it said the UK had a "legal obligation" to extradite Mr Assange.
The Wikileaks website published a mass of leaked diplomatic cables that embarrassed several governments, particularly the US, in 2010, and Mr Assange says he fears Sweden will pass him on to the American authorities.
Meanwhile, a number of police officers are outside the embassy, in Knightsbridge.
Analysis
It was not a piece of news anyone thought would come from Ecuador - and the style of the announcement came as a great surprise.
Ecuador's Foreign Minister Ricardo Patino was visibly angry as he lectured the UK government on its diplomatic obligations for several minutes.
The British "threat" to enter its London embassy to capture Julian Assange, however, might accomplish the unthinkable and briefly unite Ecuador's political forces.
Critics of President Rafael Correa have accused the government of not properly handling Mr Assange's case but have also deemed the UK position unacceptable.
They also fear any violation of Ecuador's sovereignty would strengthen Mr Correa and could turn him into a hero. The question now is whether they will let him fight this battle on his own.
At a news conference in Quito on Wednesday, Mr Patino said a letter from the UK government was delivered through a British embassy official.
"Today we received from the United Kingdom an express threat, in writing, that they might storm our Embassy in London if we don't hand over Julian Assange," he said.
"Ecuador rejects in the most emphatic terms the explicit threat of the British official communication."
'Hostile act'
He said such a threat was "improper of a democratic, civilized and rule abiding country".
"If the measure announced in the British official communication is enacted, it will be interpreted by Ecuador as an unacceptable, unfriendly and hostile act and as an attempt against our sovereignty. It would force us to respond," he said.
"We are not a British colony".
A Foreign Office spokesman said the UK remained "determined" to fulfil its obligation to extradite Mr Assange.
"Throughout this process have we have drawn the Ecuadorians' attention to relevant provisions of our law, whether, for example, the extensive human rights safeguards in our extradition procedures, or to the legal status of diplomatic premises in the UK," the spokesman said.
UK letter to Ecuador
Foreign minister Ricardo Patino said the letter from the UK to Ecuador stated: "You need to be aware that there is a legal base in the UK, the Diplomatic and Consular Premises Act 1987, that would allow us to take actions in order to arrest Mr Assange in the current premises of the embassy.
"We sincerely hope that we do not reach that point, but if you are not capable of resolving this matter of Mr Assange's presence in your premises, this is an open option for us."
It went on: "We need to reiterate that we consider the continued use of the diplomatic premises in this way incompatible with the Vienna Convention and unsustainable and we have made clear the serious implications that this has for our diplomatic relations."
"We are still committed to reaching a mutually acceptable solution."
The law which Britain is threatening to invoke in the Assange case is the UK 'frustrated'
It allows the UK to revoke the diplomatic status of an embassy on UK soil, which would potentially allow police to enter the building to arrest Mr Assange.
The BBC's deputy political editor James Landale says the British government has been in long negotiations with Ecuador over the issue and has reminded it of the act.
But he added that while the UK has been frustrated at the lack of a decision it is not about to raid the embassy.
Even if Mr Assange is granted asylum, he will have to cross British territory and could be arrested, our correspondent said.
On Monday, Ecuador's President Rafael Correa said a decision would be made this week after he held a meeting with his advisers.
Mr Patino told reporters the decision had been made and an announcement would issued on Thursday morning, at 07:00 Ecuadorian time (13:00 BST).
Final appeal
In 2010, two female ex-Wikileaks volunteers alleged that Mr Assange, an Australian citizen, had attacked them while he was in Stockholm to give a lecture.
Mr Assange claims the sex was consensual and the allegations are politically motivated.
He says he is concerned he may be sent later to the US to face espionage charges.
In June, judges at the UK's Supreme Court dismissed his final appeal against extradition to Sweden.
An offer to the Swedish authorities by Ecuador for investigators to interview Mr Assange inside the embassy, was rejected.