Gibraltar's border will be manned by Spanish officials under David Lammy's post-Brexit deal over the future of the Rock.
Travellers arriving by air to the British Overseas Territory will see "dual border control checks" by Spain's and Gibraltar's officials, the Foreign Office said on Wednesday afternoon.
Meanwhile, Spanish officials will be responsible for ensuring the integrity of the Schengen Area, in a model similar to French police operating in London’s St Pancras station, the department said.
Gibraltarian sources had long vowed that there would be "no Spanish boots on the rock" - but one of Madrid's key demands was to have its officials in place on the peninsula.
"As the only UK overseas territory which shares a border with the EU, today's political agreement provides a practical solution for the unique situation faced by the people of Gibraltar whose livelihoods depend on a fluid border," the Foreign Office statement added.
David Lammy said following the deal's signing: "This Government inherited a situation from the last Government which put Gibraltar's economy and way of life under threat. Today's breakthrough delivers a practical solution after years of uncertainty.
"Alongside the Government of Gibraltar, we have a reached an agreement which protects British sovereignty, supports Gibraltar's economy and allows businesses to plan for the long-term once again.
"I thank the Chief Minister and his Government for their tireless dedication throughout the negotiations. The UK's commitment to Gibraltar remains as solid as the Rock itself."
Foreign Office sources had earlier told GB News that there were no plans to allow Gibraltar to join the EU's free movement scheme, amid fears that Labour would surrender the Rock's borders to Spain entirely.
After reaching an agreement with Gibraltar's Chief Minister Fabian Picardo, Lammy headed to Brussels to secure the deal with EU Brexit negotiator Maros Sefcovic and Spanish Foreign Minister Jose Manuel Albares.
Lammy secured the deal with Picardo and has travelled to Brussels to finalise the arrangements
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Picardo wrote on social media: "[It was] time to try to finalise arrangements for lasting, stable relationship between Gibraltar and the EU/Spain which is safe, secure and beneficial."
The deal would allow around 15,000 Spanish workers to continue crossing the border daily and Gibraltarians to have their freedom of movement back within Europe.
And the Foreign Office said it "provides a practical solution to avoid the need for onerous checks and long delays at the border which would have proved ruinous for Gibraltar's economy, costing hundreds of millions a year and placing pressure on the UK taxpayer for fiscal support."
Earlier, ex-Home Secretary Suella Braverman told GB News: "We are absolutely furious about this deal. It's another unbelievable and unimaginable betrayal.
"Through their warped apologist view of history this Government seeks determined to put the Britain last. This is yet another step for us to rejoin the EU by the back door.
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"We will now be in the absurd situation where British people, arriving on sovereign British territory, will have to show their passports to foreign officials.
"It won't be long before the Government pays Spain to take Gibraltar and does the same for the Falklands and Argentina."
But Picardo hit back at the former Home Secretary in a fiery online rebuke. He blasted: "Except, it's not true."
This comes after a Foreign Office source told GB News that any suggestion about the Rock joining the Schengen Zone was "categorically untrue" and has "never been on the table".
Chief Minister Fabian Picardo said he was 'delighted we have finalised a conclusive political agreement which will bring legal certainty to the people of Gibraltar'
PAAnd in the wake of the deal's sign-off, Picardo said in a statement: "I'm delighted we have finalised a conclusive political agreement which will bring legal certainty to the people of Gibraltar, its businesses and to those across the region who rely on stability at the frontier.
"I have worked hand in glove with the UK Government throughout this negotiation to deliver the deal Gibraltar wants and needs - one that will protect future generations of British Gibraltarians and does not in any way affect our British sovereignty.
"Now is the time to look beyond the arguments of the past and towards a time of renewed cooperation and understanding. Now the deal is done, it's time to finalise the Treaty."
Later on Wednesday, Downing Street said the Prime Minister had spoken to Picardo and Spanish PM Pedro Sanchez.
"The Prime Minister spoke to the Chief Minister of Gibraltar Fabian Picardo this evening, to congratulate him on today's historic agreement to secure the future of Gibraltar," No10 said.
"He thanked him for his years of hard work, commitment, and leadership to reach an agreement - adding that it was fantastic to see that it had been profusely welcomed by all sides.
"Both agreed that this would unlock a secure future for the people and businesses of Gibraltar, allowing them plan for the long-term while protecting British sovereignty.
"The Prime Minister spoke to the Prime Minister of Spain Pedro Sanchez this evening, following today's historic agreement to secure the future of Gibraltar.
"Prime Minister Sanchez congratulated the Prime Minister on his leadership, adding that his government had succeeded where others had failed.
"Both leaders also agreed that this development unlocks huge opportunity to advance the bilateral relationship between the UK and Spain, on behalf of the British and Spanish people. They looked forward to meeting in person soon."
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