Prime Minister Vladimir Putin endorsed the move and urged that international observers be brought in to monitor the energy dispute.

As Russia and Ukraine blamed each other for the crisis, the effects of the gas cut-off reverberated across the continent, where some countries have substantial reserves and others do not.

Bulgaria, the EU's poorest member, was among the worst hit, with tens of thousands of people without central heating. Croatia declared a state of emergency and the situation in Bosnia was so dire that woodcutters revved up their chain saws to cut wood for fireplaces.

"It is a shame that in the last two decades our rulers did not look for alternative sources of energy supplies. It's again up to Moscow," retired teacher Anelia Petrova said in Sofia, the Bulgarian capital.

Hundreds stormed shops in Sofia looking for electric heaters. Tsvyatko Peev got the last one in a downtown shop.

"I'm glad I got one, although I fear that the additional electricity costs will ruin the family budget," Peev said.

The EU accused both nations of using consumers as pawns in their quarrel.

"It is unacceptable that the EU gas supply security is taken hostage to negotiations between Russia and Ukraine," EU spokeswoman Pia Ahrenkilde Hansen said, demanding an immediate resumption of gas supplies.

In Washington, US officials criticised Russia for Europe's energy crisis.

"Cutting off these supplies during winter to a vulnerable population is just something that is unacceptable to us," State Department spokesman Robert Wood said.

US national security adviser Stephen Hadley warned Moscow that using energy exports to threaten its neighbours will undermine its international standing.

Russia supplies one-quarter of Europe's natural gas, and about 80 per cent of that is shipped through pipelines crossing Ukraine. Other smaller pipelines run through Belarus and Turkey.

Russia's gas monopoly Gazprom stopped all gas shipments to Ukraine on January 1 after the two countries failed to agree on prices and transit fees for 2009, but kept supplies flowing to Europe over Ukraine's pipelines.

By Wednesday, Putin ordered Gazprom to stop all shipments through Ukraine.

"This should be done publicly and in the presence of international observers," he told Gazprom CEO Alexei Miller.

EU Commission President Jose Manuel Barroso pressed Putin and his Ukrainian counterpart Yulia Tymoshenko for a quick resolution to the standoff.

"If this matter is not solved, it will raise very serious doubts about the reliability of Russia as a supplier of gas to Europe and Ukraine as a transit country," Barroso said.

He said both countries agreed Wednesday to accept international monitors to verify the flow of gas.

As of Wednesday, nations including Bulgaria, Croatia, the Czech Republic, Greece, Italy, Macedonia, Romania, Serbia, Slovakia, Slovenia and Turkey all reported a halt in Russian gas shipments. Others _ including Austria, France, Germany, Hungary and Poland _ reported substantial drops in supplies.

In the Balkans, people celebrating Orthodox Christmas scrambled to find other sources of heat for their homes as authorities cut off some gas to conserve supplies.

Schools in Bulgaria closed down as authorities tried to find alternative heating.

Romania and Bulgaria held national security meetings to address the issue, while Hungary and Slovakia, which receives all of its gas from Russia, began reducing natural gas deliveries to big industrial customers.

Norway, another big gas supplier to Europe, said it cannot do much to offset the Russian shortfalls because it was operating at near maximum production and pipeline capacity for exports.

On Thursday in Moscow, Ukraine and Russia will hold their first face-to-face talks since the breakdown of negotiations December 31.

In 2008, Russia charged Ukraine about half what it charged its European customers for gas _ a practice it has long sought to change. Ukraine, however, says if it pays more for natural gas, Russia should pay more for shipping that gas across Ukraine.

Ukraine, which has about 16 billion cubic meters of gas in a vast underground storage system, says it can weather the dispute until early April.

Gazprom, however, is losing substantial income during a peak season for gas consumption. It also will soon see an excess of gas in its system, which will create a costly storage problem.

AP