Putin said Moscow was unilaterally withdrawing from the Soviet-era Conventional Armed Forces in Europe Treaty because of 'extraordinary circumstances that affect the security of the Russian Federation', the Kremlin said. These required 'immediate measures'.

The treaty governs where Nato and Russia can station their troops in Europe. Moscow's decision to bin it suggests that Putin's talks earlier this month with President George Bush came to nothing, and that the Kremlin has reverted to its earlier belligerent mood. The Kremlin has for months been bitterly incensed by the Bush administration's decision to site elements of its missile defence shield in Poland and the Czech Republic.

Putin has derided American claims that the Pentagon system is designed to shoot down rogue missiles fired by Iran and North Korea. Instead he says the target is Russia.

Last month he said the US could use a former Soviet radar system in Azerbaijan instead. But during his seaside summit this month with Putin at the Bush family's Maine home, President Bush rejected this offer - a snub that appears to have triggered Putin's latest defiant gesture.

'The detente lasted two weeks,' Pavel Felgenhauer, a Moscow-based defence analyst, told The Observer yesterday, referring to the short-lived thaw.

Putin's decision to leave the treaty will come into effect in 150 days after the parties of the treaty have been notified. It comes against a backdrop of rapidly deteriorating relations between Russia and the West. In particular, Russia's relations with Britain are at their lowest point since the Seventies following Moscow's refusal last week to extradite Andrei Lugovoi, the former KGB agent charged with poisoning Russian dissident Alexander Litvinenko in London.

The Foreign Secretary, David Miliband, is expected to announce punitive counter-measures this week. They could see the mass expulsion of diplomats from Russia's embassy in London, and tit-for-tat reprisals by Moscow.

In Brussels, Nato bluntly condemned Russia's decision to abandon the treaty, under which Nato and the Warsaw Pact agreed to reduce their conventional armed forces immediately after the Cold War. 'It's a step in the wrong direction,' said spokesman James Appathurai. 'The allies consider this treaty to be an important cornerstone of European stability.' Estonia said it deplored the move.

The Kremlin insisted, however, it had been left little choice. Russia's Foreign Ministry called the treaty 'hopelessly outdated'. It said restrictions on Russian troop deployment were now 'senseless' and prevented 'more efficient measures against international terrorism'.

Under the treaty, signed by the former Soviet leader Mikhail Gorbachev in 1990, Russia agreed to scrap much of its military hardware in Eastern Europe and limit the number of troops stationed on its northern and southern flanks.

The treaty was amended in 1999, calling on Russia to withdraw its troops from the former Soviet republics of Moldova and Georgia. Russia ratified the treaty but did not pull out its troops, prompting the US and other Nato members to refuse to ratify the treaty until Russia withdraws.

Kremlin spokesman Dmitry Peskov yesterday said Russia could no longer tolerate a situation where it had ratified and its partners had not. Yesterday analysts said that Putin's move would probably not make much difference to Russia's military capacities, but it would allow Russian generals to carry out exercises without informing their Western counterparts and keep Russian troops in the breakaway regions of Georgia and Moldova.

Moscow's ferocious anti-Western rhetoric is set to continue ahead of parliamentary elections in December and presidential elections next year to choose Putin's successor.

Some analysts, however, believe Moscow's move is largely symbolic. The moratorium probably wouldn't result in any major build-up in heavy weaponry in European Russia, Felgenhauer said. But it would annoy Washington, he conceded. 'This will be a major irritant. It will seriously spoil relations.'