Following the report, Prime Minister Boris Johnson's spokesman: "The EU, its delegation and staff will receive the privileges and immunities necessary to enable them to carry out their work in the United Kingdom effectively".
Tobias Ellwood, a lawmaker with the governing Conservative Party who heads Parliament's Foreign Affairs Committee, said the government was being "petty".
Brussels sources fear that the UK's decision could result in the other 142 countries that do now give the European Union delegates full diplomatic rights to downgrade their statuses, which also would make it easier to expel them from host countries.
"They have to be very careful", Barnier said, adding: "I know that once again it can not be business as usual. but we are not an global organization like the others".
The report said Britain was reluctant to grant full status to European Union diplomats in London because it did not want to set a precedent in the eyes of other worldwide organisations.
Earlier, the BBC had cited a Foreign Office spokesperson as saying: "Engagement continues with the European Union on the long-term arrangements for the European Union delegation to the UK".
The EU argues it is not a typical global organisation because it has its own currency, judicial system and the power to make law.
The Vienna Convention grants diplomats immunity from detention, criminal jurisdiction and taxation.
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The Foreign Office is insisting he and his officials should not have the privileges and immunity afforded to diplomats under the Vienna Convention.
The UK is continuing to negotiate with the European Union over the long-term arrangements for the delegation.
The European Commission, the 27-member bloc's executive body, said the EU's 143 delegations around the world had all been granted a status equivalent to that of diplomatic missions of states, and Britain was well aware of the fact.
Prime Minister Boris Johnson's spokesman, Jamie Davies, said everyone in the European Union delegation would get "the privileges and immunities necessary to allow them to carry out their work", though he did not say whether that amounted to full diplomatic status.
"Nothing has changed since the UK's exit from the European Union to justify any change in stance on the UK's part", he said, adding that the EU is "not a typical global organization".
The UK is refusing to give Joao Vale de Almeida the full diplomatic status that is granted to other ambassadors.
EU High Representative Borrell wrote to Mr Raab late past year: "Your service have sent us a draft proposal for an establishment agreement about which we have serious concerns".
He said the Foreign Office should not "pick a fight on this".
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