German chancellor Angela Merkel has warned Russia she would not allow it “trample on international law” and undermine the peaceful post-Cold War order in Europe. After three hours of talks with Russian president Vladimir Putin, a disillusioned Dr Merkel warned Moscow “old thinking about spheres of influence” would not assert itself again in Europe.

While the German leader delivered her stark warning during a speech in Sydney, Mr Putin told German television the key to resolving the conflict over Ukraine lay in maintaining strong Russian-German relations.

In an interview with ARD public television, Mr Putin made his clearest concession yet that Moscow was assisting rebels in eastern Ukraine with troops and weapons. Asked about the claims, confirmed by outside observers but denied consistently by the Kremlin, Mr Putin said: “Anyone waging a fight . . . will always find weapons.” He attacked the West for ignoring Ukraine’s use of heavy weapons to “annihilate” civilians in rebel-held areas.

“Is that what you want? We certainly don’t. And we won’t let it happen,” he said.

Unimpressed In remarks recorded before the Brisbane G20 summit but broadcast late on Sunday

, Mr Putin said it would be “too bad” if Germany and Russia lost the positive “atmosphere” built up in the last 15 years. Dr Merkel appeared unimpressed by the Russian leader’s appeal, warning that, unchecked, Russia would not end its destabilisation efforts in Ukraine.

“This is about Moldova, this is about Georgia, and if this continues then one will have to ask about Serbia and one will have to ask about the countries of the western Balkans,” she said in Sydney.

Pro-EU politicians in Georgia and Moldova have come under pressure amid the ongoing Ukraine stand-off while, in the Balkans, Russia has been courting politicians and investing heavily in infrastructure.

German officials remained coy yesterday about the Putin-Merkel talks late on Saturday evening, saying only they were “very general”.

Senior German officials blame the Russian leader for being erratic and refusing to listen to anyone. German hopes of finding a diplomatic solution to the Ukraine standoff have shrunk significantly in recent weeks, particularly after Mr Putin’s October 25th speech in Sochi, in which he warned that “it should be clear to everyone” that the “bear” would not give up its territory.

German officials have vowed to keep open communication channels to Moscow but Dr Merkel said she “didn’t want to go back” to the Cold War standoff in Europe.

It remains to be seen whether she can get her coalition to back her tough talking on Russia. While her Christian Democratic Union welcomed the Sydney speech as “completely realistic”, senior figures in Dr Merkel’s Social Democratic (SPD) coalition partner insisted diplomacy remained the best way to prevent a deterioration in Ukraine.

SPD leader Sigmar Gabriel, a political protege of Mr Putin’s confidante and ex-chancellor Gerhard Schröder, conceded the Ukraine situation was terrible with no solution in sight. But, on a visit to Belgrade, he urged ongoing talks and reminded an audience that ex-SPD leader Willy Brandt announced his detente policy with Moscow “at the height of the Cold War”.

More outspoken was SPD foreign minister Frank-Walter Steinmeier, Mr Schröder’s former chief of staff. He warned “not to close off possibilities of defusing a conflict through our public language”.