The European Union, which receives a fifth of its gas from pipelines crossing Ukraine, urged further negotiations to resolve the dispute and said all supply commitments must be met. The US also called for a swift resolution.

Energy companies in Germany, France, Romania, and Austria said they had not seen any drop in supply from the Russian cut-off. They said Europe has enough gas stockpiled to manage without Russian gas for several days, though not weeks.

Ukrainian President Viktor Yushchenko said in a statement he wanted to resume talks with Moscow to settle a row over payment arrears and gas prices for 2009. He said he was hopeful a compromise could be reached by 7 January.

Signalling a possible way out of the stand-off, Ukraine's state energy player Naftogaz increased the amount it said it was prepared to pay for Russian gas to $235 per 1000 cubic metres - $15 short of the amount Russia has demanded.

The EU is keen to avoid a repeat of a January 2006 row when Moscow cut off supplies to Ukraine, causing a brief fall in gas deliveries to other parts of Europe in mid-winter.

Russian gas export monopoly Gazprom halted supplies to Ukraine this morning after a failure to agree terms for supplying gas this year.

"We have fully cut off supplies to Ukraine as of 10:00 a.m. (0700 GMT) today," a Gazprom official told reporters at company headquarters in Moscow. "We continue supplying Europe in full."

Ukraine's Naftogaz said it had seen a reduction of pressure in its pipelines, and was pumping gas from its stockpiles, which it says are sufficient to last it several months.

Both Russia and Ukraine - which have clashed repeatedly over a drive by the pro-Western leadership in Kiev to join Nato - say they will do nothing to jeopardise supplies to Europe.

The cut-off could, however, have a knock-on effect if it causes a drop in pressure in the transit pipelines or if Ukraine diverts flows bound for Europe.

Naftogaz chief Oleh Dubyna said the firm was diverting 21 million cubic metres per day of Russian gas bound for Europe. He said the gas was needed to maintain sufficient pressure in the pipeline network to keep transit gas moving.

Gazprom said it had stepped up volumes for European consumers beyond Ukraine to 326 MMcmd from the usual level of 300 MMcm - a step which may have been aimed at offsetting the gas Ukraine was diverting.

At the Texas ranch of US President George W. Bush, a White House spokesman urged Moscow and Kiev to bear in mind the possible humanitarian implications of supply disruptions.

"We hope that Russia and Ukraine can resolve their dispute over the gas debt and the terms of their natural gas supply arrangements in a transparent, commercial manner," Reuters quoted Gordon Johndroe saying in a written statement.

Earlier, the EU urged more talks.

"All existing commitments to supply and transit must be honoured," the Czech Republic - which took over the EU's rotating presidency today - said in a joint statement with the Commission, the bloc's executive.

Pipelines that cross Ukraine are a major source of foreign currency revenue for Gazprom, Russia's biggest company.

The cut-off could tarnish Russia's reputation as a reliable energy supplier to Europe, five months after its war with Georgia damaged the Kremlin's standing in the West.

Germany, France and Italy are among the biggest customers for Russian gas. If there is disruption, it could be some time before it is felt because of the large distances involved.

Bernhard Reutersberg, chairman of Germany's E.ON Ruhrgas, said in a statement he did not anticipate any shortages for consumers.

But he added that if "the supply restrictions prove to be serious and long-lasting and the winter turns out to be particularly cold, our means of offsetting the shortfalls will come up against limits."

Published: 01 January 2009 17:04 GMT  | Last updated: 01 January 2009 17:04 GMT