The diplomatic standoff between Britain and Ecuador over WikiLeaks founder Julia Assange has reached a settlement stage as Quito confirmed on Saturday that "we consider this unfortunate incident over."

The statement was made by Ecuadorian President Rafael Correa, indicating that he had accepted assurances from London that British police officers would not forcibly enter the Ecuadorian embassy to arrest and re-detain Mr Assange.

The Australian whistleblower has been holed up in the embassy since June this year and is under the diplomatic protection of Ecuador following the recent decision by Mr Correa to grant his application for asylum.

Mr Assange sought refuge in the Ecuadorian mission as signs emerged in June that British authorities would likely extradite him to Sweden to face questioning on alleged rape cases.

The tension between London and Quito was heightened last week as the former hinted that local laws in existence would provide for the temporary suspension of the Ecuadorian embassy's diplomatic status.

Scotland Yard officers would then be able to enter the embassy premises and take Mr Assange into custody.

Mr Correa, however, took London's statement as a veiled threat that could lead to the British police storming into his country's embassy.

The simmering row dragged on and was resolved only Friday when a British diplomat in attendance of the Organization of American States (OAS) meet in Washington urged Ecuador to reengage with Britain on 'constructive discussion' over the Assange affair.

"We believe that our two countries should be able to find a diplomatic solution," Reuters reported the unnamed British diplomat as saying, which was followed by an official statement from the British Foreign Office.

"We remain committed to the process of dialogue we have entered into and we want that to resume with the government of Ecuador," the statement said.

In response to the British overture, Mr Correa said on a media briefing over the weekend that the worst is over between his country and the British government, whose action last week was assailed by the OAS as likely resulting to dangerous precedents in nations' diplomatic relations.

The organisation also labelled Britain's pressure on Ecuador as unacceptable.

For his part, Mr Correa referred to the incident last week as "a grave diplomatic error by the British in which they said they would enter our embassy."

Despite the easing of tension, Britain said it will have to fulfil its legal role of sending Mr Assange to Sweden in order to shed light on accusations that he raped two former female volunteers of his anti-secrecy website.

Mr Assange has been claiming that cases were mere covers for U.S. authorities to get their hands on him following the leaked U.S. diplomatic cables last year that WikiLeaks published.

The Aussie national feared that he might be imprisoned for life or even face the death penalty in America for espionage or sedition though Washington has maintained that it has not started any criminal proceedings against Mr Assange.

U.S. authorities also clarified that no requests for Mr Assange's were filed before the British or Swedish government.

However, Mr Correa said he agreed with the Australian's sentiments, which he said earlier were the prime reasons he extended diplomatic protection to Mr Assange.