China's top parliamentarians have ruled that Hong Kong will not have direct elections for its leader in 2007.
Hong Kong's chief executive Tung Chee-hwa backs Beijing's stand
Hong Kong's pro-democracy campaigners wanted the territory's next leader to be elected, not approved by Beijing.
But China's most powerful legislative panel has decided any political reforms will have to be introduced gradually.
British Foreign Office Minister Bill Rammell is holding an urgent meeting with the Chinese ambassador to express his concerns.
Another minister, Lady Symons, told the House of Lords that China's National People's Congress had "interpreted" the Basic Law. which provides for the development of democratic processes in the territory.
Hong Kong was a British colony until it was handed back to Chinese rule in 1997. It was promised a high degree of autonomy at the time of the handover.
Hong Kong's chief executive Tung Chee-hwa, who has Beijing's full backing, said he supported China's ruling and called on people to be "calm and rational".
"The overriding concern of the central government is to maintain
the well-being of Hong Kong," said Mr Tung, whose unpopularity is cited by some Hong Kong people as the reason direct elections are needed.
'Twisting public opinion'
The decision to delay Hong Kong's moves to full democracy was made by the Standing Committee of China's National People's Congress.
The ruling was not surprising, since the body decided earlier this month that China had the final say over the former British colony's political development.
The Standing Committee also ruled out the possibility of direct elections for all Hong Kong legislators in 2008.
One political activist, Leung Kwok-hung, told AP news agency that with this ruling the Chinese National People's Congress Standing Committee was "twisting the Hong Kong public's opinion".
Opposition Hong Kong legislator Fred Li accused Beijing of "dictating Hong Kong policy" without regard to public opinion.
At the moment Hong Kong residents now have no direct say in choosing their leader and they pick only some legislators.
Hong Kong's mini-constitution - known as the Basic Law - sets out full democracy as an eventual goal, but the timing for its achievement is ambiguously stated.
Democracy campaigners argue that China and Mr Tung are undermining Hong Kong's "high degree of autonomy", as promised under a system that became known as "one country, two systems" when Hong Kong was returned to China in 1997.