Ukraine has rejected draft laws that would allow the release of a jailed opposition leader, suspended plans for a landmark agreement with the European Union and announced it will renew active dialogue with Russia.

The Ukrainian parliament's failure to pass the bills on Thursday to grant freedom to the former prime minister Yulia Tymoshenko, took away the country's last chance to satisfy the EU's condition for stepping towards integration with the 28-member bloc.

The decree issued by Prime Minister Mykola Azarov on the government website on Thursday said that the decision was taken in order to "ensure the national security of Ukraine" after taking into account the effects of trade with Russia if the agreement was signed on November 28-29 summit in Vilnius.

The agreement with the EU would have marked a pivotal shift westwards for the ex-Soviet republic's 46 million people, away from historic Russian ally.

The government instead proposed creating a three-way trade commission between Ukraine, the European Union and Russia that would resolve trade issues between the three sides.

Last chance

EU leaders have repeatedly warned that Ukraine may not have another chance of signing the Association Agreement for several years, with the EU Commission due to change in 2014 and Ukraine set for presidential elections in 2015.

The leader of the opposition responded to the government order by saying that President Viktor Yanukovich could face impeachment if he failed to sign the agreement with the EU.

The opposition has accused Yanukovych of having no interest in seeing Tymoshenko released ahead of 2015 polls and deliberately trying to stymie the inking of the deal with the EU.

Meanwhile, Putin, whose government piled pressure on Ukraine in the run-up to the summit, said on Thursday that Moscow was not against Ukraine signing the association agreement.

"We are not against Ukraine's sovereign choice whatever it may be," he said, reiterating however the threat of protective measures should Ukraine join forces with Europe.