Under the deal, Gibraltar will not officially join the zone, made up of 29 mainly EU countries, but Schengen-style border checks will instead be carried out on travellers arriving at the territory’s port and airport.
Gibraltarian officials will carry out initial checks on arrivals, with Spanish authorities then conducting “second line” checks in a special zone.
The system is designed to remove checks at Gibraltar’s land border with Spain, which is crossed every day by around half of the Rock’s workforce.
The UK government is likening it to the system in operation at London’s St Pancras station, where Eurostar passengers are checked by both British and French officials before boarding trains for the continent.