Ukrainian prosecutors have accused jailed opposition leader Yulia Tymoshenko of ordering the killing of a business rival 16 years ago, dealing a new blow to the former prime minister who the West says is the victim of a political vendetta.

The announcement came on Friday after a court adjourned a second trial against Tymoshenko for tax evasion and her defence counsel warned her health had declined to a "critical" level.

Tymoshenko is already serving a seven-year jail sentence for abuse of office, meted out in October 2011. A guilty verdict on the latest charge could put her behind bars for life.

She is currently being treated for back pain in a hospital outside her prison in the eastern Ukrainian city of Kharkiv.

She and Western governments say she is the victim of a witch-hunt by the leadership of President Viktor Yanukovich, who narrowly beat her in a run-off for the presidency in February 2010.

Political enemies of the 52-year-old politician have indicated for a year that an additional case was building against her over the killing of Yevhen Shcherban, a deputy and businessman who died in a hail of bullets in 1996 as he stepped from a plane.

But the announcement by state prosecutor Viktor Pshonka that Tymoshenko, a powerful gas trader in the 1990s, had conspired with a former prime minister, Pavlo Lazarenko, in ordering a $2.8m "hit" against Shcherban came as a surprise.

String of murders

The killings followed several other murders in Donetsk, including a football stadium bombing that killed the owner of Shakhtar Donetsk club, and led to a realignment of political and business alliances in the key steel and coal-producing region.

Back then, both Tymoshenko and Yanukovich were big players in a turbulent region which seethed with intrigue and where fortunes were made and lost in murky dealings ranging from sales of state assets to protection rackets, extortion and theft.

Pshonka said in May last year that investigators were trawling through evidence in the case, including new testimony from the dead man's son.

Ruslan Shcherban was 19 at the time and survived the attack by hiding under a car, but he emerged last year to say he had evidence implicating Tymoshenko.

Tymoshenko, the heroine of street protests in 2004 called the "Orange Revolution", which overturned the old post-Soviet order and doomed Yanukovich's first bid for the presidency, denies wrongdoing.

The US and the European Union have supported Tymoshenko, calling her case an example of selective justice.

The EU has shelved agreements on free trade and political association with Ukraine over the issue. It made the release of Tymoshenko a precondition for the signature of a document establishing broader trade and political relations between the two sides.

Lazarenko was jailed for nine years in the United States for fraud and money laundering. He served his sentence but is still in detention in the United States over immigration issues.