Ukraine's prime minister Mykola Azarov has described a $15bn aid package from Russia as a historic deal to allow the ex-Soviet republic return to economic growth, as protesters in Kiev voiced anger over a "sell-out" to Moscow.

Ukraine's president Viktor Yanukovych and Russia's Vladimir Putin announced the bailout for Kiev on Tuesday after talks in Moscow. The deal also includes lowering the price for Russian gas deliveries to Ukraine pays by about a third.

"The head of state managed to agree lower gas prices as of January 1st and until the contract ends," Azarov told his government, referring to a ten-year gas contract that expires in January 2019. "This allows a revival of economic growth."

"Yesterday, a historic development occurred.

"The president reached agreement on exceptionally beneficial conditions for crediting Ukraine's economy, which allows us to carry out wide-ranging plans for economic modernisation," Azarov said.

Putin's intervention raised the stakes in the battle over Ukraine's future.

The announcements came after he held talks in Moscow with his Ukrainian counterpart, who is facing massive protests at home for his decision to shelve a pact with the European Union in favour of closer ties with Russia.

Economic experts say Ukraine desperately needs at least $10bn in the coming months to avoid bankruptcy.

Putin sought to calm the protesters in Kiev by saying on Tuesday that he and Yanukovych did not discuss the prospect of Ukraine joining the Russian-dominated Customs Union. But the sweeping agreements are likely to fuel the anger of demonstrators who want Ukraine to break from Russia's orbit and integrate with the 28-nation EU.

The Russian finance minister, Anton Siluanov, said after the Kremlin talks that Russia would purchase $15bn in Ukraine's Eurobonds, starting this month.

Putin said the Russian state-controlled gas monopoly, Gazprom, will cut the price that Ukraine must pay for Russian gas deliveries to $268 per 1,000 cubic metres from the current level of about $400 per 1,000 cubic metres.

In brief remarks to the media before they began the talks, Putin said Ukraine "is without doubt, in the full sense of the word, our strategic partner and ally". He said that over the past two years, trade levels between the countries had dropped, but that the range of new agreements would rectify that.

"The time has come to take energetic steps not only to return to the levels of recent years but to go further," he said.

Membership of the Customs Union, a Moscow-led trade grouping into which the Kremlin has been keen to entice Ukraine, is unlikely to be on the agenda in the near future, but it is believed that in return for a package of loans and trade concessions, Yanukovych has agreed not to sign the EU deal.

Putin looked relaxed before the meeting, slouching in his chair, while Yanukovych sat bolt upright and spoke with long pauses between sentences. Ukrainian media reported that Yanukovych's delegation had asked the Russians not to arrange a joint press conference after the meetings finished.

Nevertheless, Yanukovych said the documents on the table represented a "strategic decision" and that the two sides should work harder to develop closer relations in future. He told Putin he hoped the "traditional" issue of gas prices could be solved.

Demonstrators have sealed off the centre of Kiev for several weeks and repulsed police efforts to remove them. On Tuesday morning, several hundred protesters stood on Yanukovych's route to the airport, holding signs that read: "Turn the plane round to Europe!"