Crimeans are voting in a referendum that will decide whether the Black Sea peninsula leaves Ukraine and becomes part of Russia.

The referendum is regarded as illegal by Ukraine and its Western allies, but is being backed by Moscow, which has vetoed a UN Security Council draft resolution that declared the poll invalid.

The region's 1.5 million voters are expected to support leaving Ukraine, a move that could prompt US and European sanctions against those seen as responsible for the takeover of Crimea.

Many Crimeans who said they would opt for Russia have cited expectations of better pay and becoming part of a country capable of asserting itself on the world stage.

But others see the referendum as nothing more than a power grab by bullies in the Kremlin prepared to exploit Ukraine's relative economic and military weakness.

According to ballot papers published before the referendum, voters have the right to choose one of two options, neither of which rejects control by Russia.

The first question asks: "Are you in favour of the reunification of Crimea with Russia as a part of the Russian Federation?"

The second asks: "Are you in favour of restoring the 1992 Constitution and the status of Crimea as a part of Ukraine?"

At first glance, the second option seems to offer the prospects of the peninsula remaining within Ukraine. But the 1992 national blueprint is far from doing that.

Instead, it foresees giving Crimea all the qualities of an independent entity within Ukraine - but with the broad right to determine its own path and choose relations with whom it wants - including with Russia.

At a high school in the Crimean regional capital of Simferopol, dozens of people queued to vote on a cool, cloudy morning.

"I came here on this festive day and voted for the benefit of Crimea and Crimeans, and now I'll head into town to celebrate," said Vladimir, in his late 40s.

Russia, which has close historical ties to Ukraine and especially to Crimea, began seizing the region after Ukrainian president Viktor Yanukovych was ousted in February, following a violent uprising in which nearly 100 people were killed.

Russian president Vladimir Putin has justified his aggressive stance on Crimea by saying "fascists" ousted Mr Yanukovych.

The referendum is regarded as illegal by Ukraine and its Western allies, but is being backed by Russia ( AFP: Dimitar Dilkoff )

The protests began when Mr Yanukovych turned his back on a trade deal with Europe and decided instead on closer economic ties with Ukraine's former Soviet overlord - Russia.

Kiev and Western governments have declared the referendum illegal, but have been powerless to stop it.

The streets of the Crimean capital Simferopol have been largely calm in the days leading up to the vote, although the heavy presence of armed men, many wearing black balaclavas, has created an unnerving atmosphere in the normally sleepy town.

Crimean prime minister Sergei Aksyonov, whose election two weeks ago in a closed session of the regional parliament is not recognised by Kiev, does not officially acknowledge that Russian troops are in control of Crimea - a position also maintained by Moscow.

They say that thousands of unidentified armed men, visible across the region, belong to "self-defence" groups created to ensure stability.

But the Russian military, which leases the Crimean naval base of Sevastopol from Ukraine, has done little to hide the arrival of thousands of soldiers, along with trucks, armoured vehicles and artillery.

In the run-up to the referendum, the worst violence in Ukraine has been in the east, where acting president Oleksander Turchinov said there had been three deaths in two days.

He also said there was "a real danger" of invasion by Russian troops across the eastern border. The area has a large number of Russian-speakers - significant since Mr Putin has vowed to protect ethnic Russians and Russian-speakers in Ukraine.

ABC/wires