President says he hopes he does not have to exercise military force as he points out eastern Ukraine was once part of Russia

Vladimir Putin has sought to mobilise history in support of Russia's designs on Ukraine, reminding the world that the east of the country was once part of Russia, and warning that his parliament had given him the right to intervene militarily if confrontation escalates.

In a four-hour, meticulously stagecrafted question and answer session with Russian citizens on live television, Putin denied that Russian forces are on the ground in the towns and cities of eastern Ukraine, parts of which have been taken over in recent days by armed men, but pointedly did not rule out sending in troops in future.

Accusing the Kiev authorities of pulling the country into an "abyss", he called on Ukraine to pull back its heavy artillery from the east of the country, asking: "Who are you going to use it against? Have you completely lost your marbles?"

"The Federation Council granted the president the right to use military force in Ukraine," he said, referring to the upper house of parliament. "I really hope that I do not have to exercise this right and that we are able to solve all today's pressing issues via political and diplomatic means," Putin said.

Putin referred to the region in question by its tsarist name "Novorossiya", or "New Russia", as it was referred to in the 19th century under tsarist rule, and suggested it was a historical mistake to hand it over to Ukraine.

"It's new Russia," he told millions of watchers "Kharkiv, Lugansk, Donetsk, Odessa were not part of Ukraine in tsarist times, they were transferred in 1920. Why? God knows. Then for various reasons these areas were gone, and the people stayed there – we need to encourage them to find a solution."

Asked on several occasions during the annual public address whether Russia had sent troops into eastern Ukraine over the past few days, Putin said: "It's all nonsense, there are no special units, special forces or instructors there." The bands of men, in unmarked green military uniforms, who have seized tanks from Ukrainian forces were local residents, he said.

But he admitted that Russian units had been involved in wresting Crimea from Kiev's control last month.

"Our servicemen stood behind the back of Crimea's self-defence forces," Putin said. "They acted politely, but resolutely and professionally. There was no other way to hold the referendum in an open, honest and honorable way and allow the people to express their opinion."

As talks opened in Geneva with representatives from the EU, US, Russia and Ukraine, he said that the talks were important but added that a resolution to the crisis would not emerge during compromise talks between US and Russia, but needed to be found in Ukraine itself.

He added: "I'm sure we will come to a mutual understanding with Ukraine. We will not be able to do without each other," he said.

Though the televised session was generally comfortable for Putin, with Ukraine dominating the exchanges, not all the questions were straightforward. One Crimean asked the president when he would sort out a currency and banking mess that has emerged as the territory shifts to Russian control. Putin promised that the process of switching Crimea's banking system to the rouble would be speeded up, and he promised a series of substantial rises for pensioners in Ukraine. "They will feel the advantage of joining the Russian federation materially," he said.

Another question broached his marital status following his divorce from his wife Lyudmila. His response was elliptical. "First I need to let my former wife, Lyudmila Alexandrovna, marry, and only then will I think about it myself."

Putin veered between wanting to appear conciliatory and retreating into hostile anti-American rhetoric. He said the annexation of Crimea was partly triggered by Nato expansion.

"We were once promised in Munich that after the unification of Germany no expansion of Nato would happen to the east. Then it started to expand by adding former Warsaw pact countries, former USSR countries. I asked: 'Why are you doing that?' They told me it is not your business; people and nations have the right to chose how they defend themselves.

"Will they drag Ukraine into Nato? If Nato goes there, Russia will be pushed out from the area around the Black Sea. This is pushing out Russia from this important part of the world. Let's not be afraid of anything, but we should take that into account, and respond accordingly."

The Russian news agency Itar Tass said 2m questions had been posed on the internet before the session and ranged in subject matter from the escalating crisis in Ukraine to the Russian economy, child benefits, housing and corruption. Most of the questions selected for Putin to answer on live television were gentle, and were often prefaced with messages of gratitude to the president for the way he was handling the situation in Ukraine.

There were moments of strange humour. Putin was asked if he was planning to "acquire Alaska". He reminded viewers that Russia had sold Alaska for a cheap price to the US in the 19th century, but said there were no plans to restore it to Russian territory. "What would you need Alaska for?" he asked.

Asked about Victor Yanukovich's decision to flee to Russia from Ukraine as unrest unfolded, Putin was asked whether he would have fought to the last drop of blood if he found himself in a similar situation.

"A person makes a decision in a critical situation, based on his life experience and values. I used to work in the KGB – we had our special training. Part of that training is that you have to be absolutely loyal to your country and state."