Russian Prime Minister Vladimir Putin on Wednesday approved a proposal by the state-run gas monopoly Gazprom to completely cut off supplies to Europe via Ukraine.

During a meeting with Putin in the northern city of St. Petersburg, Gazprom CEO Alexei Miller proposed to stop gas supplies through Ukraine, accusing Kiev of "stealing" gas in transit.

"I agree with your proposal, but it should be done as openly as we can, and in the presence of international observers," Putin was quoted by the RIA Novosti news agency as saying.

Earlier on Wednesday, Ukraine's state-owned gas company Naftogaz alleged Russia had cut off all gas supplies through Ukraine to Europe. Gazprom responded that it was Kiev which had stopped deliveries of Russian gas to Europe even as Gazprom continued to supply the gas transport system of Ukraine.

Russia cut off gas supplies to Ukraine on January 1 after the two countries failed to reach an agreement on gas prices for 2009.

About a quarter of the gas used in the European Union (EU) -- more than 40 percent of the bloc's imports -- comes from Russia.

Ukraine sits on the main transit route for Russia's gas exports, with about 80 percent of Russian gas supplied to the EU passing through it.

A similar dispute over gas prices between Kiev and Moscow erupted in 2006 when Gazprom cut all gas supplies to Ukraine, raising deep concerns among European customers.

(Xinhua News Agency January 8, 2009)