Boris Johnson accused Beijing of a "clear and serious breach" of its treaty with Britain by imposing a much-criticised national security law on the territory.
The prime minister said he would introduce a route for people with British National Overseas (BNO) status to apply for visas to live and work in the UK and apply for citizenship.
In response, the Chinese Embassy in the UK said such a move would be in breach of "international law and basic norms governing international relations".
A statement said: "We firmly oppose this and reserve the right to take corresponding measures. We urge the British side to view objectively and fairly the national security legislation for Hong Kong, respect China's position and concerns, refrain from interfering in Hong Kong affairs in any way."
On Wednesday, the Foreign Office summoned Chinese ambassador Liu Xiaoming to a meeting with permanent under-secretary Sir Simon McDonald.
Sir Simon said the imposition of the legislation breaches the Sino-British Joint Declaration which aimed to smooth the transition when the territory was handed back to China in 1997.
This came as Foreign Secretary Dominic Raab accused Beijing of a "grave and deeply disturbing" breach of the treaty which "threatens the strangulation" of Hong Kong's freedoms.
The security law in Hong Kong which came into effect on Tuesday night makes activities deemed subversive or secessionist punishable by imprisonment, and is seen as targeting anti-government demonstrators.
Around 370 people were arrested on Wednesday including a 24-year-old man accused of stabbing a police officer during a protest who was arrested on a London-bound flight before it took off.
Raab told MPs the "bespoke" new arrangement to be implemented in the coming months would grant BNOs five years' limited leave to remain in the UK with the ability to live and work.
They would then be eligible to apply for settled status and would be able to apply for citizenship after 12 months with that status.
As of February, there were nearly 350,000 BNO passport holders, while the government estimates there are around 2.9 million BNOs living in Hong Kong.
However, the Foreign Secretary later said "only a proportion" would be likely to take up the new status.
He also said that if Beijing tried to stop people with British National Overseas status from leaving Hong Kong, there would be little that could be done by the UK. ■