Ukraine took a first step toward granting more powers to the regions yesterday, but stopped well short of creating the federation sought by Russia.

Ukraine's new government unveiled its high-stakes plan under the dual pressure of Russian troops massed along its border and a veiled Kremlin threat to raise the price it charges for crucial gas deliveries for a second time in a week.

But Ukraine - having won vital financial backing from the IMF last week and a morale boost from a meeting of NATO foreign ministers on Tuesday - appeared ready to resist the Kremlin's attempts to dislodge the more Russified regions in the east of the ex-Soviet country from direct Kiev rule.

The government said it would like to eliminate the current practice under which local governors are appointed by the president and move toward an election system. But it said nothing about granting regions the right to set their own trade policies or establish special relations with foreign states.

"The main idea behind the concept is to decentralize power in the country and substantially broaden the authority of local communities," the government said in a statement.

Russia has sought radical reforms in Ukraine in the wake of the February overthrow of a pro-Kremlin government whose rejection of closer ties with Europe sparked months of deadly unrest.

Russia would like to see Ukraine become a federation that allows eastern regions to adopt Russian as a second state language and overrule some decisions coming from Kiev.

Russia argues the changes are needed because ethnic Russians have allegedly been coming under increasing attack from ultranationalist forces that helped the new leaders overthrow Kiev's Moscow-backed president.

The military buildup on the EU's eastern frontier follows months of economic pressure that Russia had poured on Ukraine in a bid to force its leaders to reverse their drive toward the West.

Russia's state energy giant Gazprom has raised the price it charges Ukraine for natural gas shipments by 44 percent. That eliminated a discount Russia extended the old government in December in reward for its rejection of closer EU trade ties.

But Ukraine now faces the possibility of 1,000 cubic meters of gas jumping by another US$100. Moscow says that rebate, awarded in 2010 for allowing the Kremlin to keep its Black Sea Fleet in Crimea, no longer applies because Crimea is now a part of Russia.