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Downing Street backed calls for Fifa to investigate the incident, with the prime minister's official spokesperson saying: "The World Cup might not be ours, but the Falkland Islands definitely are. Our commitment to the Falklands will never waver."
No 10 added that any potential action against Argentina players who unveiled the banner was "a matter for Fifa", but echoed the view of Business Secretary Peter Kyle that world football's governing body should investigate.
For its part, the government of the Falkland Islands said it was "disappointed but not surprised" about the banner and it hopes Fifa will "sanction all behaviour of this nature in line with its own rules".
"We do not wish to see politics being brought into sport" a statement added.
"Nor do we wish the Islands and their people to be used as a political football in every conversation about England and Argentina".
In 2013, the people of the Falkland Islands voted overwhelmingly in favour of remaining a UK overseas territory.
Of 1,517 votes cast in the two-day referendum - on a turnout of more than 90% - 1,513 were in favour, while just three votes were against.
Argentina vice-president Victoria Villarruel posted on X after Wednesday's victory that "it wasn't just another match" alongside a video of what appeared to be Argentine soldiers.
"The Falklands are Argentine," Villarruel posted. "They banned bringing them to the stadium and forgot that we carry them in our blood and our hearts."
Argentina players also sang chants which referenced the Falklands and Argentina greats Maradona and Lionel Messi following their dramatic 3-2 win over Egypt in the last 16.
A brief but bitter war arose between Britain and Argentina over the territory in 1982.
A British military task force ejected Argentine forces, who had landed on the Falklands to stake a territorial claim.
The 74-day conflict led to the deaths of 255 British military personnel, three islanders and 649 Argentine soldiers.

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