The calamitous Foreign Office note to Ecuador – interpreted there and elsewhere as a threat to raid the country's London embassy where the Wikileaks founder, Julian Assange, is holed up – was sanctioned by William Hague, despite the grave reservations of lawyers in his department.

At least one of the lawyers at the Foreign Office (FCO) expressed concern over the warning that Britain could use the Diplomatic and Consular Premises Act 1987 to "storm" the embassy building and remove Assange, who faces sex crime allegations in Sweden. A senior Whitehall source said yesterday that staff feared the move could provoke retaliatory attacks against British embassies overseas.

The potential use of the 1987 Act was included in an FCO "speaking note" delivered to the Ecuadorians on Wednesday, the day before President Correa granted him asylum. The law permits Britain to revoke the status of a diplomatic mission if the state in question "ceases to use land for the purposes of its mission or exclusively for the purposes of a consular post" – but only if such a move is "permissible under international law". In its letter, Britain added – in the time-honoured fashion of someone threatening to send the boys round – "We very much hope not to get to this point."

Although the Government has claimed the reference to the 1987 Act was not a threat, the note sparked a furious response around the world. Ecuador has already convened a special meeting of the Organization of American States (OAS) this Friday to discuss "the inviolability of the diplomatic premises of Ecuador in the United Kingdom of Great Britain and Northern Ireland in accordance with international law".

One Foreign Office staffer attempted to play down the crisis, insisting, despite the continuing war of words: "We wish to seek a diplomatic solution to this." This afternoon at 2pm, Assange is due to make a statement "outside" the embassy. He will not only have to be sure he remains on Ecuador premises, lest he be arrested, but will have to weigh his words carefully. Under Ecuador's asylum offer, Assange is not permitted to make political statements, restrictions that are standard for anyone granted asylum, said an Ecuadorian Foreign Ministry official.

The Wikileaks founder is wanted for questioning by Swedish authorities on one count of unlawful coercion, two of sexual molestation, and one of rape following allegations made by two women. Assange insists the sex they had was entirely consensual. He left Sweden before he could be seen by police, and came to Britain.

So began the long process to extradite him which wound its way through the British courts. What has hung over these proceedings – and led to the offer of diplomatic asylum (not political asylum, as widely reported) – is his claim that, once extradited to Sweden, he would be shipped to the US to stand trial for his part in the publication on Wikileaks of thousands of US government cables, and then possibly executed.

The US has never clarified its position on possible proceedings against Assange, despite having held Bradley Manning, the man accused of passing the cables to Wikileaks, in custody for many months. Nor has it dismissed the unlikely thesis that any charges he might face would carry the death penalty for this non-US citizen. (Under European law, if by any chance execution was an option this would prevent his extradition to the US anyway.) Ecuador said it had tried, without success, to get assurances from Britain and Sweden that Assange could not be extradited to a third country. Puzzling, too, has been Sweden's refusal to accept Ecuador's offer to question Assange in their London embassy.

It was on 19 June that Assange skipped bail and sought refuge in the Ecuador embassy in Hans Crescent, near Harrods in Knightsbridge, west London. The embassy consists of 10 rooms on the first floor. Assange is living in a small office that has been equipped with a bed, exercise machine, sun lamp (the embassy has no garden) and internet connection. A shower has been installed, and there is a small kitchenette. "It's not quite the Hilton," said Gavin MacFadyen, a friend. Sarah Saunders, with whom Assange stayed in her East Sussex cottage, has been taking him food parcels. "I took him a chocolate cake but I'm limited in what I'm able to bring," she said. "I hate the thought of him having prison food, because he has a very sensitive palate."

There are conflicting reports about his mental state. His mother, Christine Assange, said last month: "He is under a lot of stress and it's been long-term stress now for nearly two years and in conditions which are similar to detention." Yet supporters who have visited claim he is more buoyant. Ms Saunders said: "When he got the news [about asylum] he was clearly absolutely delighted. The Ecuadorians have been incredibly hospitable."

Vaughan Smith, the WikiLeaks supporter who hosted Assange for more than a year at his country mansion, visited last week and said his friend was holding up well: "As a person though, he is happiest behind a computer doing his job. He is coping well. He was the same Julian he was when he was staying with me. He is not a sentimental person and so does not miss things other people might miss. A spokesman for Assange, said: "He's been spending a lot of time monitoring the investigation by the FBI [into Wikileaks]. We recently learnt a bit about the scope of it and around 2,000 documents have been gathered in that investigation."

Ecuador, even if it wanted to be so provocative, lacks any obvious means of getting Assange past the police officers on the doorstep, on to a plane, and out of Britain. The embassy is not linked internally with any of the building's gated entrances, making the front entrance its only point of exit. Even if he somehow managed to get into a waiting car, he would have to leave the vehicle at some point to board a flight out of Britain. More adventurous scenarios, involving crates, diplomatic bags and airlifts, are dismissed as very unlikely by diplomats and lawyers.

Rafael Correa, president of Ecuador since 2007 and facing re-election in February, is an economist who has used Ecuador's oil revenues to boost public spending. He is populist, intolerant of media criticism (to the point of repression, say his critics), but is not a hothead. Although he has been widely applauded in his own country and throughout the region for his stance on Assange, there could yet be a price to pay. At present, Ecuador is the beneficiary of the Andean Trade Preference Act, which allows its goods into the US free of tariffs. Forty-five per cent of Ecuador's exports go to the US, accounting for about 400,000 jobs. Chevron Corp and many US business groups are urging the White House to suspend Ecuador's benefit.