By Oleksander Miliukov

ODESSA, Ukraine (Reuters) - Pro-Russian militants stormed a Ukrainian police station in Odessa on Sunday and freed nearly 70 fellow activists as the country's leaders lamented a police force they said was widely undermined by graft or collaboration with separatists.

Militants chanted "We will not forgive!" and "Russia!" as they smashed windows and broke down the gate at the compound two days after over 40 pro-Russian activists died in a blaze at a building they had occupied after clashes with pro-Kiev groups.

Odessa police said 67 activists were allowed to walk free.

Some officers were offered the black and orange St. George's ribbon, a Russian military insignia that has become a symbol of the revolt, and were cheered by the crowd of several hundred.

Prime Minister Arseny Yatseniuk, speaking in the Black Sea port, was pointedly critical of the Odessa police: "If the law enforcement system in Odessa had worked not exclusively on the 'Seventh Kilometre' and had protected people, then these terrorist organisations would have been foiled," he said.

The Seventh Kilometre is an open market on the edge of Odessa, associated in the popular consciousness with the corruption and black market business that have blighted Ukraine's 23 years of post-Soviet independence.

Addressing hundreds of supporters of the Kiev authorities who gathered near the site of the blaze late on Sunday, newly appointed police chief Ivan Katerinchuk promised to bring those behind Friday's deaths to justice, whatever their allegiance: "Like you, I want to restore law and order to Ukraine," he said.

Friday's clashes were the deadliest since Moscow-oriented president Viktor Yanukovich was forced to flee in February and pro-Russian militants launched uprisings in the industrial east. They also marked the first serious disorder far to the west of those eastern areas, heralding possible trouble for Kiev.

Friday's deaths occurred after running clashes, involving petrol bombs and gunfire, between supporters and opponents of Moscow on the streets of Odessa, where the majority of people speak Russian. The pro-Russian activists were trapped in a building as it burned down.

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"COLOSSAL PROBLEM"

Acting President Oleksander Turchinov said separatists had met resistance in Odessa but that police forces in the eastern Luhansk and Donetsk regions, focus of support for pro-Russian militants, were in disarray in the face of rebellion.

"In these regions ... there are whole structures working together with the terrorists," Turchinov said in a television interview, employing the term Kiev applies to anti-Kiev militants who have set up strongpoints in a string of eastern towns. "This is a colossal problem."

Turchinov said Russian special forces were working with success to destabilise Ukraine, helped by "guest stars from Transdniestria" - a breakaway territory in eastern Moldova, 50 km (30 miles) from Odessa, that hosts a Russian military base.

NATO commanders have warned that Russia might hope to control a swathe of southern and eastern Ukraine, including the annexed Crimea, all the way to the border with Transdniestria.

Outright civil war in Ukraine and the division of a country the size of France would have serious implications for countries around, not least for Russia and for NATO states bordering it.

As rebellion simmered, questions were raised about the ability of the army as well as police to confront insurgents.

Police in the eastern port of Mariupol said pro-Russian rebels posing as sympathisers had presented soldiers at a checkpoint with gifts of food.

"It turned out that the food contained a substance that induced sleep among the servicemen," the acting head of Mariupol criminal police department, Alexei Paniotov, said.

"After about half an hour, about 20 unidentified people arrived in three cars and, taking advantage of their helpless state, took them prisoner along with four automatic rifles, a grenade launcher, a machinegun and ammunition."

The five soldiers were freed after negotiations.

DIPLOMATIC MOVES

Yatseniuk dismissed Russian accusations that his government was provoking bloodshed in the east with an operation to restore Kiev's authority in a series of cities under rebel control.

"The process of dialogue had begun, only it was drowned out by the sound of shooting from automatic rifles of Russian production," he said.

There was renewed diplomatic activity on Sunday.

Russia said it would try to organise talks between Kiev and representatives from the south-east: "It appears that without external help the Kiev authorities are not capable of establishing such a dialogue," Russian deputy foreign minister Grigory Karasin told Rossiya-24 television.

Germany's foreign minister said he was pressing for a second international conference at Geneva to bring Russia and Ukraine together with the United States and European Union to settle the dispute. Moscow and Kiev accuse each other of wrecking a four-way accord to end the conflict signed at Geneva on April 17.

Russian President Vladimir Putin and German Chancellor Angela Merkel discussed the Ukraine crisis in a telephone call and stressed the importance of "effective international action" to reduce tension, the Kremlin said on Sunday.

A German government spokeswoman said they had also discussed a visit to Moscow on Wednesday by the head of the OSCE, the European security body which has been trying to mediate on the ground but saw some of its monitors held for a week by rebels.

Ukraine is divided between a largely Russian-speaking population in the industrial east and Ukrainian-speaking west, where more pro-European Union views prevail. Moscow says Russian-speakers face threats from Ukrainian nationalist militants, an accusation Kiev denies.

There were no signs of Ukrainian forces pushing their declared campaign to remove separatists from eastern cities including Kramatorsk, Donetsk and the rebel stronghold of Slaviansk.

Kiev is organising a presidential election for May 25.

However, as things stand, it would have trouble conducting the vote in many parts of the east, a circumstance that would allow Russia to declare any government emerging as bereft of legitimacy.

Russia denies ambitions to seize eastern Ukraine as it has annexed the Crimea peninsula but reserves the right to send troops to defend Russian-speakers if it deems necessary.

Separatists who have declared a "People's Republic of Donetsk" are planning a referendum on secession next Sunday.

The capital Kiev has remained quiet since the protests that forced Yanukovich to flee to Russia. But celebrations this week marking the anniversary of the Soviet victory in World War Two could be a source of tension.

(Writing by Ralph Boulton in Kiev; Editing by Alastair Macdonald)