Governments across Europe declared states of emergency and ordered factories to close as Russia cut all gas supplies through Ukraine yesterday in their worsening dispute over unpaid bills.

José Manuel Barroso, the European Commission President, accused the two countries of taking the EU’s energy supply “hostage” amid a cold snap across the Continent, and urged them to reopen the pipelines immediately.

Schools and factories were closed and trees were felled to keep home fires burning after Russia turned off the gas taps to more than a dozen countries. It was a clear demonstration of the dependence of the Continent on Russian gas supplies.

Despite temperatures as low as minus 27C and the threat of heating cuts to millions of households, Moscow said that it had no choice but to cease supplies because Ukraine, the country through which 80 per cent of Russian gas bound for Europe flows, had closed its pipelines. The claim was denied by Kiev.

Countries tapped into their reserves and urged the use of alternative fuels but at least 15,000 households in Bulgaria – which gets 92 per cent of its gas via the Ukrainian pipelines – found their heating cut off overnight.

Slovakia’s Government followed Bulgaria by announcing that it may have to restart a mothballed Soviet-era nuclear power plant.

The Balkan states, which rely almost completely on Russian gas and have failed to develop modern infra-structures or alternative energy sources, have been the hardest hit at the time of the Orthodox Christmas.

In Sarajevo, the capital of Bosnia-Herzegovina, there were bitter memories of the Bosnian conflict from 1992-95, when the population cut down trees to try to stay warm or bought coal on the black market.

Sven Alkalay, the Bosnian Foreign Minister, said: “Four million of our citizens are in danger.” Almir Becarevic, the manager of the state gas company, said: “If this lasts it could turn into a humanitarian disaster. We pray that someone can find a solution.”

To try to restart supplies, the EU proposed yesterday that it should send independent monitors to watch the dials on the pipes at Ukraine’s borders. Russia claims that Ukraine is taking gas it has not paid for from the pipelines, reducing the onward supply to Europe. It has responded by cutting supplies in the pipeline by the amount it says Ukraine is stealing.

By checking how much gas is entering Ukraine from Russia and then measuring how much emerges at its western borders with Europe, the EU hopes to establish who is to blame for the shortages.

Mr Barroso said that he had agreement in principle for the process from Vladimir Putin, the Russian Prime Minister, and his Ukrainian counterpart, Yuliya Tymoshenko, who will send officials to Brussels today to thrash out the details. Mr Barroso spoke to both leaders yesterday, but he said they continued to blame each other. “Prime Minister Putin told me that Russia is providing the gas destined for the EU, Prime Minister Tymoshenko told me that they have created no problems with transit through Ukraine,” an exasperated Mr Barroso said. “The conclusion is clear: if both Russia and Ukraine behave as they say they are behaving, there should be no problem.”

He added: “If Ukraine is trying to be closer to the European Union, it should not create problems when it comes to the supply of gas to the EU.”

Yet 12 countries received no Russian gas at all yesterday: Austria, Bulgaria, Slovakia, the Czech Republic, Bosnia, Croatia, Greece, Hungary, Macedonia, Romania, Serbia and Turkey. France, Italy, Germany and Poland reported that their supplies from Russia were markedly down.

The International Energy Agency, which is the energy-monitoring and policy arm of the Organisation for Economic Cooperation and Development, said that the situation was “completely unacceptable, given that European customers are not a party in this dispute.

“Despite the reassuring statements late December by both parties that supply to Europe would not be interrupted, supplies have now come to a complete halt,” it said. “The interruption is creating hardship during the coldest weather Europe has faced within a number of years.”

The US showed who it blamed for the crisis when Stephen Hadley, the National Security Adviser, warned Moscow that using its energy exports to threaten its neighbours would undermine its international standing.

Amid mounting fears of shortages in Germany and France, Britain has begun to export emergency supplies of gas to Europe. The flow in the pipeline connecting Britain to Belgium and beyond, which normally imports gas to Britain, was reversed late yesterday after prices on the Continent rose.

Analysts said that the weak pound was encouraging European suppliers to use Britain as a cheap transit route for Norwegian gas.

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