HMS York was involved in an incident with an Argentine warship before the latest flare-up in tensions over the Falklands, it has emerged.

The destroyer, on which the freedom of the City of York was bestowed in 1991, is currently stationed in the Falklands.

Britain’s decision to start exploratory drilling for oil off the South Atlantic islands has sparked protests from Argentina at the United Nations in New York.

But British Ministers have said that the Government would take “whatever steps are necessary” to protect the islands, which had a “legitimate right” to develop an oil industry within their waters.

A national newspaper reported that HMS York had intercepted an Argentine corvette in British waters in the first head-to-head row over the island.

The destroyer was said to have spotted the ARA Drummond up to ten miles inside the disputed oil zone and monitored her progress before radioing for her to change course, and the Drummond came within 65 miles of the Falklands before complying, with no further action taken.

But the Ministry of Defence said the incident happened on January 28, before the latest rise in tension, and was the result of a storm sending the boat off course rather than a deliberate incursion.

Meanwhile, the head of the Royal Navy has said he is “comfortable” with British forces levels in the Falklands.

Admiral Sir Mark Stanhope, the First Sea Lord and Chief of the Naval Staff, said that the defence of the islands was far stronger than it was at the time of the 1982 invasion by Argentina.

There were currently 1,000 troops stationed there as well as a number of RAF aircraft while, as well as HMS York, the Navy also had a patrol craft, survey ship and a Royal Fleet Auxiliary vessel in the area.

HMS York’s civic links with the city of York were reinforced last summer when the ship’s company exercised their right to the freedom of the city with a parade through the streets and a blessing on the steps of the Minster.