Moscow  - Russian Prime Minsiter Vladimir Putin and his Ukrainian counterpart Yulia Tymoshenko settled a contractual dispute on Sunday morning, allowing for an end to a week-long freeze on transits to gas-starved Europe.

The two premiers emerged from crisis talks that ran into the early hours of the morning Sunday with an accord on gas pricing for 2009, and pledged to resume gas transits to Europe as soon as the documents the documents were signed on January 19.

"Negotiations were very hard, but we have come to mutual understanding ... All natural gas supplies will resume as soon as these documents are signed," Tymoshenko said in a televised statement.

Putin said Ukraine would be offered a 20 per cent discount on market price for Russian gas deliveries this year, if it agrees to keep transits fees for pumping gas to Europe via its pipelines at the 2008 level.

The two post-Soviet neighbors will switch to European market prices in their gas trade from 2010, Putin said.

The breakthrough came as the European Union stepped up pressure for a speedy resolution to the crisis, which it charged damaged both countries' credibility as reliable suppliers.

Over a dozen European countries had chocked the flow of gas to a trickle over the past week, forcing hundreds of thousands to suffer without heat in the dead of winter and factories to be shut in the most severely affected capitals.

Europe receives a quarter of its gas from Russia - 80 per cent of which flows through Ukrainian pipelines.

But experts say it could take up to three days for gas supplies to reach Europe and for pressure to return to normal in pipelines after the taps are opened.

While no technical details of the accord were announced Sunday, the deal appeared to repose on earlier pledges by the European Union to provide an extra supply of "technical gas" needed to restart transits as well as monitors to control the flows of gas to Europe.

But it was still unclear Sunday whether Tuymoshenko had the backing of her political rival Ukrainian President Viktor Yushchenko to stick to the terms she negotiated in Moscow.

Russian President Dmitry Medvedev, answering reporters' questions at an emergency gas summit at the Kremlin on Saturday, said simply that he hoped that Tymoshenko had the necessary mandate to reach a conclusive deal.

Putin also made no comment on a 614-million-dollar debt Russia claims from Kiev for late payments, which was another contested point leading to the gas cuts.

Russia embargoed gas supplies to Ukraine on January 1 when Kiev balked at paying higher price for gas in 2009. Russia then halted all supplies of gas to Ukraine on January 7, accusing Kiev of stealing gas destined for European customers further downstream.

Underlying the deadlock are long-simmering political tensions between the two post-Soviet neighbours. Moscow resents moves by Ukraine's pro-Western president, Yushchenko, to join NATO and its support for Georgia in its war with Russia last August. (dpa)