The British Navy intercepts Argentine warship

Ocean Guardian oil rig in the Cromarty Firth, near Invergordon, Scotland. The British rig has begun drilling for oil in the territorial waters of the Falkland Islands, despite strong opposition from Argentina

Destroyer HMS York jintercepted the vessel around ten miles inside the disputed “oil zone” around the South Atlantic islands, the Telegraph newspaper reports.

The British crew radioed the Argentinian ship, a smaller corvette named ARA Drummond, to demand that it change its course.

Sources told The Sun that the ship made an “innocent navigational blunder” and were embarrassed about the mistake.

It is believed that the Drummond was spotted sailing alongside a French fleet before it broke away and headed for the disputed zone.

The ship was spotted around 65 miles from the islands, in an area of sea called the by the British the “conservation zone”.

It is in this zone that the oil exploration is taking place. It is not illegal for Argentinian ships to enter it but the incident has heightened tensions.

A spokesman for the MoD played down the significance of the incident, insisting that the radio communication had been “friendly”.

He said: “We can confirm that on 28 January this year during rough weather and at night, HMS YORK and an Argentine ship were operating in the same locality in international waters around 50 miles from Falkland Island Territorial Waters. After a friendly dialogue by radio they each continued with their own exercises.”

On Wednesday the MoD said that HMS York would remain the in area around the islands. A British submarine has also been dispatched to the Falklands to patrol the area.