The European Parliament omitted to mention the topic of Gibraltar in its red lines for Brexit negotiations on Wednesday, after heated debate on the British outcrop bordering Spain.
A resolution overwhelmingly approved by MEPs did not take up a clause in draft EU leaders' guidelines requiring Spain to be consulted on any post-Brexit trade deal that affects Gibraltar.
"Numerous MEPs referred during the debate to the question of Gibraltar, but there is no mention of this territory in the resolution adopted by the plenary session," a European Parliament press release said.
The MEPs also failed to adopt an amendment to the resolution which would have said Gibraltar had voted to remain in the European Union.
During debate in the assembly, Brexit champion Nigel Farage echoed British alarm over the clause in the draft guidelines revealed last week by EU President Donald Tusk, who represents the remaining 27 member states.
Britain responded angrily, with one former leader of British Prime Minister Theresa May's Conservative party even invoking the memory of the Falklands War against Argentina.
Farage, the former leader of the UK Independence Party, accused the EU 27 of "hypocrisy" by claiming to negotiate with London as one and yet allowing Spain to have a "veto" over a future trade deal if it is unhappy over Gibraltar's fate.
"Your aim and ambition is to destroy nation state democracy," he said. "Gibraltar is clearly a deal-breaker on current terms."
Spanish conservative MEP Esteban Gonzalez Pons hit back, saying Britain could not be allowed to have its "tax haven" Gibraltar still operating under EU trade rules.
He lamented signs of "extremism verging on racism" in Britain, adding that "for the past week we have heard endless insults against Spain and nationalists with the word 'war' on their lips".