Russia says it wants Ukraine's leaders to talk directly to separatists to end the conflict in the east, but Ukraine's government has rejected the call and told Russia to stop "playing games" aimed at legitimising "terrorists".

Russia backs the separatists but denies it is directly involved in the conflict in the Donbass region.

"We are calling for the establishment of stable contacts between Kiev and Donbass representatives with the aim of reaching mutually acceptable agreements," Sergey Lavrov, Russian foreign minister, said in a policy address to the lower house of parliament in Moscow on Wednesday.

We will not hold direct talks with your mercenaries. Arseniy Yatsenyuk, Ukrainian Prime Minister.

Arseniy Yatsenyuk, Ukrainian prime minister, hit back, accusing Russia of trying to push Ukraine into recognising the pro-Russian rebels who are fighting government troops to split parts of the eastern Donetsk and Luhansk regions from Kiev.

The two regions held leadership votes earlier in November which Kiev and the West have refused to recognise, but that Russia said gave the separatist areas legitimacy when it came to holding high-level talks with the Ukrainian government.

The exchange comes as Lavrov claimed that Ukraine's decision to freeze budget payments to the eastern rebel-held territories could be a precursor to a military onslaught.

Ukrainian officials announced earlier this month that they will freeze the $2.6 bn in state support to the areas now in rebel hands, which could further worsen the deplorable economic situation there.

Lavrov said he suspects that by doing so, Kiev is "preparing the ground for another invasion in order to solve the issue by force."

Ukraine and the West accuse Russia of destabilising Ukraine by providing the rebels with money, arms and reinforcements.

The US and the EU have imposed sanctions on Russia over the conflict in which more than 4,000 people have been killed since mid-April.

Speaking at a government meeting on Wednesday, Yatsenyuk declared Ukraine would not speak directly to the separatists and repeated the phrase slowly in Russian for emphasis, saying: "We will not hold direct talks with your mercenaries."

A ceasefire deal was approved on September 5 in the Belarussian capital of Minsk as part of a wider deal between Moscow, the Kiev-based government and the rebels under the auspices of the Organisation for Security and Cooperation in Europe (OSCE) - with a former president representing Kiev to avoid formal recognition of the rebels.

But the truce is under constant pressure, with deaths of government troops and civilians reported daily. Ukraine and the West accuse Russia of sending tanks and troops to back the rebels but Russia denies the charges.

Deep rifts with Kiev

Lavrov and President Vladimir Putin held talks with Frank-Walter Steinmeier, German foreign minister, in Moscow on Tuesday but failed to overcome deep rifts over Ukraine.

Yatsenyuk called on Russia to "stop playing games aimed at legitimising bandits and terrorists".

He said: "If you [Russia] want peace, fulfil the Minsk agreement."

Lavrov said in Moscow that the "party of war" - supporters of Kiev's military campaign against the rebels - had tried to exclude the separatists from peace moves and to "force the West to seek the consent of Russia to act as a side in the conflict."

"This is a completely counterproductive and provocative line that has no chance of succeeding," Lavrov said.

Also on Wednesday, Putin urged the new US ambassador not to interfere in Russia's affairs as he accepted credentials from John Tefft.

"We are ready for practical cooperation with American partners along various directions guided by the principles of respect for each other's interests, equal rights and non-interference into domestic affairs," Putin said.