UK "military options" are ready should a Russian spy ship become a threat, Secretary of State for Defence John Healey has said, after the vessel directed lasers at British pilots sent to monitor it.
Royal Navy and Royal Air Force (RAF) crews routinely shadow potential threats to national security.
Missions to monitor Russian vessels and submarines have become more frequent since Moscow's army invaded Ukraine in 2022.
Mr Healey said that directing lasers at RAF pilots was "deeply dangerous" and the UK was poised to react depending on the next move by the ship, named Yantar.
"We have military options ready should the Yantar change course," the minister said.
Responding to what it described as "endless accusations", the Russian embassy in London said: "Our country's actions do not affect the interests of the United Kingdom and are not aimed at undermining its security.
"We are not interested in British underwater communications," it said, urging "the British side to refrain from destructive steps that exacerbate the crisis phenomena on the European continent".
Yantar, designed for intelligence gathering and mapping undersea cables, is on the edge of British waters, north of Scotland, Mr Healey said.
"This is the first time we've had this action from Yantar directed against the British RAF. We take it extremely seriously.
"I have changed the navy's rules of engagement so that we can follow more closely, monitor more closely, the activities of the Yantar when it's in our wider waters," he added.