The Foreign Office "completely rejects" Julian Assange is the victim of arbitrary detention and will formally contest the ruling by the UN's panel.
The WikiLeaks founder is wanted for extradition on a rape accusation in Sweden and has lived in the embassy since June 2012.
A Foreign Office spokesperson said the UN working group's decision against the UK and Sweden "changes nothing" in relation to the case.
Julian Assange has never been arbitrarily detained by the UK. The opinion of the UN Working Group ignores the facts and the well-recognised protections of the British legal system. He is, in fact, voluntarily avoiding lawful arrest by choosing to remain in the Ecuadorean embassy. An allegation of rape is still outstanding and a European Arrest Warrant in place, so the UK continues to have a legal obligation to extradite him to Sweden. As the UK is not a party to the Caracas Convention, we do not recognise ‘diplomatic asylum’.
We are deeply frustrated that this unacceptable situation is still being allowed to continue. Ecuador must engage with Sweden in good faith to bring it to an end. Americas Minister Hugo Swire made this clear to the Ecuadorean Ambassador in November, and we continue to raise the matter in Quito.
The Metropolitan Police have said they will make "every effort" to arrest Mr Assange should he leave the embassy.
A five-person panel became four before even looking at the Assange case and ended with the group divided and ridiculed by Philip Hammond.
From his 2010 arrest warrant to a UN expert panel's call for the WikiLeaks founder to be freed, review the key dates in the Assange case.
Read the full statement by the UN panel, calling for Julian Assange's "right to compensation" and for his "deprivation of liberty" to end.