At that session, Puigdemont said that Catalonia had "earned the right" to become an independent republic in its October 1 independence referendum, which was banned by Spain's Constitutional Court.
The response from Madrid comes after Catalan leader Carles Puigdemont submitted a letter to Madrid on Thursday, saying: "If the Spanish government continues to impede dialogue and continue repression, the Catalan parliament, could proceed... to vote on a formal declaration of independence that it did not vote on October 10".
The Cabinet meeting will "approve the measures that will be sent to the Senate to protect the general interest of all Spaniards", the government statement said.
Spain's National Court ordered the leaders of Assemblea Nacional Catalana and Omnium Cultural, the grassroots organizations behind the separatist bid, to be held for allegedly orchestrating protests in mid-September that hindered a judicial investigation into preparations for the banned October 1 referendum. But the turnout was low - around 43% of the voter roll - which Catalan officials blamed on the central government's efforts to stop the vote.
Carles Puigdemont's warning came in a letter to Spain's leader minutes before the expiration of a deadline to back down on the independence bid.
"If the government continues to impede dialogue and continues with the repression, the Catalan parliament could proceed, if it is considered opportune, to vote on a formal declaration of independence", Puigdemont said in a letter to Rajoy. But he immediately suspended the implementation of the secession proclamation and called for talks with Spain and global mediators.
Catalans would consider the application of Article 155 an "invasion" of the region's self-government.
Violent scenes unfolded as national police sought to prevent people from casting their ballots, leaving hundreds of people injured.
The separatists declared an overwhelming victory despite a boycott by opponents in Catalonia, who called the vote illegal.
He says, "there is a constitution that must be respected".
The crisis has caused widespread uncertainty in Catalonia, a wealthy region in Spain's northeast, and prompted some companies to move their legal headquarters to other parts of Spain.
Puigdemont, in an address to the regional parliament last week, declared independence but then immediately suspended it and challenged Spain to hold negotiations.
Central government officials have said they could hold off on applying Article 155 if the Catalan separatist leader were to call an early regional election, but Catalan officials have ruled that out.
Such a declaration "will see the fracture between hardliners and the pragmatic people in Catalonia, who are already seeing an economic fallout", Dowling said.
Civil society groups in Catalonia are calling for new protests over the jailing of their pro-independence leaders by Spanish authorities.