Speaking at the presidential palace less than two weeks after winning sweeping new powers in a referendum, a relaxed Erdogan said a decision by a leading European human rights body to put Turkey back on a watch list was "entirely political" and that Ankara did not recognise the move.
This may potentially lead to deterioration of ties between Ankara and Brussels.
The parliamentary assembly of the Council of Europe (PACE) voted to reinstate its monitoring of Turkey's respect for fundamental freedoms, a process it had relaxed in 2004 when it meant to pave the way for it to begin accession talks with the European Union.
Turkey is under a state of emergency imposed after a failed coup last July, allowing President Erdoğan to head the cabinet and rule the country by decree, with already weakened parliamentary and judicial oversight.
Anti-EU sentiment has risen to unprecedented levels in Turkey fueled by ever growing deception among the population on faltering and never ending membership talks and by the opposition of some EU countries to a full membership perspective for Ankara.
The ministry also warned that the decision, which "will serve terror organisations", "leaves no choice to Turkey but to reconsider its relations with PACE".
He said his government would decide on the steps to be taken against the decision.
The Council of Europe decision is over the crackdown on dissent in the wake of last year's coup attempt in Turkey. "It is purely a political decision", said government spokesman Numan Kurtulmus on public TV channel TRT.
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Mr Orban said that while the quality of democracy was important, the priority for Turkey was its stability.
The Minister noted that he was extremely surprised by such a verdict since it was adopted at a meeting in which only half of the PACE MPs participated.
Turkey called on the European Union to resume the negotiations in January.
The ministry is headed by Mevlüt Çavuşoğlu who, ironically, was PACE president between 2010 and 2012. "The parties will discuss the situation in Syria and Iraq, as well as possible extradition of preacher Fethullah Gulen from the USA", the foreign media say.
"I don't understand why we risk the existing process supported by the Secretary General and the European Union, by stigmatizing Turkey with reopening the monitoring procedure, when we have a post-monitoring process". "On the contrary, it is a punitive measure", Seyidov added.
Turkey remains committed to a stalled accession process to join the 28-member bloc, but Erdogan did not rule out putting the question of whether to join to a referendum.
Earlier, Turkey's then Minister for the EU Affairs Volkan Bozkir said that by late February 2016, Ankara will receive $3 billion euros allocated by the EU to upkeep the Syrian refugees in Turkey.
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