Russian prosecutors last week said they had turned down a request to extradite Lugovoi, to face trial for Litvinenko's murder, saying Russia's constitution did not allow for the extradition of its citizens.
"We've consistently said that the murder of Mr. Litvinenko is a serious criminal matter," a spokeswoman for the Foreign Office told Reuters today, on customary condition of anonymity. "The Russian reply is unacceptable. We will consider our response with the deliberation and seriousness that it deserves."
Moscow has said it would consider trying Lugovoi, a former state security agent turned businessman, in Russia instead if Britain presented enough evidence.
But Britain's director of public prosecutions, Ken Macdonald, dismissed that offer.
"The allegation against Mr Lugovoi is that he murdered a British citizen by deliberate poisoning," Macdonald said in a statement. "The appropriate venue for his trial is therefore London."
The murder of Litvinenko, a Kremlin critic who died in London in November from radiation poisoning, has strained relations between Britain and Russia.