Ecuador has granted political asylum to WikiLeaks' founder Julian Assange, Foreign Minister Ricardo Patino said on Thursday, a day after the British government threatened to storm the Ecuadorean embassy in London to arrest the former hacker.

Britain has said it is determined to extradite him to Sweden, where he is accused of rape and sexual assault, but Assange fears he will ultimately be sent to the United States which is furious that his WikiLeaks website has leaked hundreds of thousands of secret U.S. diplomatic and military cables.

Ecuador's decision is likely to deepen a political dispute over Assange's extradition with Britain, which said it was "disappointed" with the ruling, and sets the stage for possible further confrontation between the two countries.

Patino said Ecuador feared for the safety of the Australian, who had lodged an asylum request with President Rafael Correa, a self-declared enemy of "corrupt" media and U.S. "imperialism".

"Ecuador has decided to grant political asylum to Julian Assange following the request sent to the President," Patino told a news conference in Quito.

Patino said Assange's extradition to a third country without proper guarantees was probable, and that legal evidence showed he would not get a fair trial if eventually transferred to the United States.

"This is a sovereign decision protected by international law. It makes no sense to surmise that this implies a breaking of relations (with Britain)," Patino added.

Assange has been holed up inside Ecuador's embassy in central London for eight weeks since he lost a legal battle to avoid extradition to Sweden.

Even after Thursday's decision his fate is still far from clear: Britain has promised to extradite him and the removal of the Ecuadorean embassy's diplomatic status would expose him to immediate arrest by the British authorities.

"We are disappointed," a Foreign Office spokesman said.

"Under UK law, with Mr Assange having exhausted all options of appeal, the British authorities are under a binding obligation to extradite him to Sweden. We shall carry out that obligation."

EMBASSY STRESS?

Outside the Ecuadorean embassy near London's famed Harrods department store, supporters relayed the announcement about his asylum request over a loudspeaker to cheers and clapping from protesters who had gathered outside the building.

Supporters shouted: "The people united will never be defeated!", waving Ecuadorian flags and holding posters showing Assange's head, reading "no extradition".

A Reuters reporter saw at least three protesters being dragged away by police before the decision was announced after tussles with police.

It was unclear how long Assange could stay in the small embassy - housed on the ground floor of an apartment block - which is under 24-hour surveillance by British police.

After the announcement, the BBC reported that Assange had thanked the staff in the London embassy for their support and had said to them: "things will get more stressful now".

Britain has said it could use a little-known piece of legislation from 1987, introduced in the wake of the shooting of a British police officer outside the Libyan embassy in London, to strip Ecuador's embassy of its diplomatic status.

The Ecuadorean government has bristled at the warning: its foreign minister said Britain was threatening Ecuador with a "hostile and intolerable act", comparing the action to Iran's storming of Britain's Tehran embassy 2011.

"I've lived, worked and travelled in places with proper dictatorships and nowhere have I seen violations of the Vienna convention to this extent," said Farhan Rasheed, 42, a historian wearing an "I love Occupy" badge, outside the embassy.

"Here we have a government which claims to be a government of law and justice, stretching and possibly about to break a serious binding international agreement."

Britain's threat to withdraw diplomatic status from the Ecuadorean embassy also drew criticism from one of its own former diplomats who said it could lead to similar moves against British embassies.

"I think the Foreign Office have slightly overreached themselves here," Britain's former ambassador to Moscow, Tony Brenton, told the BBC.

"If we live in a world where governments can arbitrarily revoke immunity and go into embassies then the life of our diplomats and their ability to conduct normal business in places like Moscow where I was and North Korea becomes close to impossible."

SEX CRIME?

Assange, whom Sweden wants to question over accusations of rape and sexual assault made by two female former WikiLeaks volunteers in August 2010, says he fears Sweden could send him on to the United States.

His supporters have said U.S. authorities want to punish him for publishing diplomatic cables which laid bare Washington's power-brokering across the globe.

"The reaction he has is that he wants to underline that this (asylum) is a measure that is aimed at the U.S. and not against Sweden," said Per E Samuelsson, one of the lawyers representing Assange who talked to Assange after the decision.

"He has sought political asylum in order to eliminate the risk that he will spend the rest of his life in prison in the United States," Samuelsson said.

Ecuador said it had tried to get assurances from Britain and Sweden that Assange could not be extradited to a third country but that no assurance was given. Under European law, neither Britain nor Sweden could extradite anyone to a country where they might face the death penalty.

Swedish prosecutors have not yet charged Assange, but they believe they have a case to take to trial and the lawyer for the two Swedish women who made the allegations against Assange said his clients deserved justice.

"It's an abuse of the asylum instrument, the purpose of which is to protect people from persecution and torture if sent back to one's country of origin," Claes Borgstrom, the lawyer representing the two Swedish women, told Reuters.

"It's not about that here. He doesn't risk being handed over to the United States for torture or the death penalty. He should be brought to justice in Sweden. This is completely absurd."