Saudi Arabia says it is "insulted" by a parliamentary inquiry into how the UK deals with the country and Bahrain.
Saudi officials have told the BBC they are now "re-evaluating their country's historic relations with Britain" and that "all options will be looked at".
While they stopped short of cancelling ongoing trade deals, the move reflects growing Saudi resentment at the West's reaction to the Arab Spring.
The Foreign Office said Saudi Arabia remained a close friend and an ally.
The Sunni-majority kingdom suspects the hand of Iran behind much of the unrest in its own Shia population and that of Bahrain.
Bahrain's opposition movement has always denied any Iranian government role in its activities.
In September, the British Parliament's Foreign Affairs Committee (FAC) announced it would be opening a wide-ranging review into the UK's relations with Saudi Arabia and Bahrain - two key Gulf Arab partners.
That followed its report on the Arab Spring democracy movement which concluded that the government was right to "support peaceful reform efforts where possible in Bahrain" but that it "must also be clear in its public criticism of human rights violations there if it is to avoid charges of hypocrisy".
The FAC said its new inquiry would look closely at how the UK balances its various interests in these countries in defence, trade, security, counter-terrorism and human rights.
But Saudi Arabia, long sensitive to western criticisms of its human rights record, believes the inquiry has been prompted by Shia activists from Bahrain, including those striving to overthrow the Sunni monarchy there.
The Saudi ambassador in London, Prince Mohammed Bin Nawaf Al-Saud told the BBC his country would "not tolerate or accept any foreign interference in the workings" of the Gulf Co-operation Council, which comprises Saudi Arabia, Bahrain, Kuwait, Qatar, UAE and Oman.
"Saudi Arabia's relations with the GCC is an internal matter among the six countries and we will not tolerate or accept any foreign interference in the workings of the GCC".
A senior Saudi official added: "The Kingdom will not permit a group of so-called human rights activists, supported and funded by foreign entities, to implant a new foreign-linked political system in a fellow GCC country."
Last year, the Bahrain Independent Commission of Inquiry (BICI) report into Bahrain's unrest found no evidence of Iranian government instigation behind the unrest.
However, it did find evidence of systemic abuse of prisoners in police custody. King Hamad of Bahrain promised reforms and an end to human rights abuses, a process which rights activists say is far from complete.
The Sunni monarchies in both Saudi Arabia and Bahrain suspect Iran of covertly supporting Shia activists they say are working to turn Bahrain into a Shia-led Islamic republic.
At the height of Bahrain's unrest last year, around 1,000 troops from the Saudi Arabian National Guard arrived in Bahrain and it was reported by some outlets they helped put down the unrest.
But the Saudi ambassador to London denied this, saying the country "as a GCC member, sent a brigade of specialised units to secure and protect critical Bahraini installations and infrastructure".
"Saudi forces have not engaged in any security operations against Bahraini citizens," he added.
The news of Saudi displeasure will be an unwelcome development for the Foreign Office.
As the world's largest oil producer, Saudi Arabia is a huge trading and defence partner for Britain with nearly £4bn of bilateral trade last year.
According to the UK Trade and Investment Office there are approximately 200 UK/Saudi joint ventures with total investment of more than £11bn.
Defence deals include the £7bn BAE Systems contract supplying the next tranche of Typhoon jets.
Thousands of British expatriates work in Saudi Arabia and British companies involved there include Shell, GlaxoSmithKline, BAE Systems, Rolls Royce and Marks & Spencer.
A Foreign Office spokesman said the government respected Parliament's "right to carry out inquiries".
"We will be responding to the FAC in due course, setting out the detail of our deep, broad-based relationship with Saudi Arabia and the strength and importance of our partnership," he added.
"Saudi Arabia is a key strategic partner in the region and one of the closest friends and allies."