Both countries claim sovereignty over the island, which is known in Morocco as Leila.
Both of them sent troops to occupy it last week before the United States negotiated a truce at the weekend.
The uninhabited island lies just 200 metres off the northern coast of Morocco. Spain also controls two nearby enclaves of Ceuta and Melilla in Moroccan territorial waters.
This latest stand-off goes back to October, when Morocco recalled its ambassador from Madrid. Spain hit back last week by withdrawing its ambassador to Rabat.
The dispute centres on issues such as fishing rights, the flow of illegal immigrants and drugs trafficking over the Straits of Gibraltar, the status of Ceuta and Melilla and of Western Sahara.
