(KIEV) - Jailed opposition leader Yulia Tymoshenko on Friday urged street protests after the Ukrainian government scrapped plans to sign a key trade deal with the European Union.

Her call was expected to boost the number of protesters already on the streets of the politically volatile country, a day following Kiev's abrupt move to drop plans to sign an Association Agreement with the EU.

Nearly 3,000 people marched through the fiercely pro-Western city of Lviv close to the border with the bloc on Friday, chanting "Revolution" as drivers honked their horns in support.

In a letter read out by her lawyer, Tymoshenko warned her nemesis, Ukrainian President Viktor Yanukovych against making the "mistake of your life" and urged Ukrainians to take to the streets.

Signing the EU deal "is your only chance to survive as a politician," she said.

Kiev unexpectedly announced Thursday it was halting preparations to sign the deal at a summit in Vilnius next week, an accord which would have marked a historic break from Russia.

Amid Western accusations that Ukraine had bowed to Kremlin pressure, Russian President Vladimir Putin on Friday denied pushing Ukraine to back out of the deal, saying it was instead Brussels which was blackmailing Kiev.

"We've heard threats from our European partners against Ukraine -- up to the point of helping them stage mass protests," Putin said.

"This is pressure. This is blackmail."

Kiev announced its pullout from the deal after lawmakers failed to pass legislation that would have allowed Tymoshenko to travel to Germany for medical treatment, a key condition set by EU leaders for the agreement.

"This is a missed opportunity," British Foreign Secretary William Hague said, while EU foreign policy chief Catherine Ashton said it was a "disappointment" for both the EU and the people of Ukraine.

The US State Department lamented that there had been still "ample time" to resolve the remaining issues ahead of the summit.

'Yanukovych betrayed us'

Prime Minister Mykola Azarov insisted before parliament Friday the decision was purely economic and did not change Ukraine's strategy of EU integration.

"The decision was hard, but the only possible one in this economic situation," Azarov said to cries of "shame" from opposition lawmakers.

Azarov blamed the International Monetary Fund for the failure, saying the tough conditions it was imposing in exchange for a new credit to Ukraine -- a deal Brussels was helping to negotiate -- was the "last straw".

At the Lviv protest on Friday, student Sergiy Grytsyuk said: "Yanukovych betrayed us. We will join the EU without him."

Demonstrators were planning to set up tents for overnight protests while local lawmakers called on Yanukovych to resurrect plans to sign the deal.

Around a thousand protested late Thursday on Kiev's Independence Square, the hub of the 2004 Orange Revolution that forced the annulment of rigged presidential polls initially claimed by Yanukovych.

The opposition led by boxing champion Vitali Klitschko, ultra-nationalist Oleg Tiagnybok and Tymoshenko ally Arseniy Yatsenyuk are calling another protest for Friday night and a mass rally on Sunday.

'Hope springs eternal'

The Kremlin, which wants Ukraine to join a Russia-led Customs Union, had threatened trade retaliation if Ukraine signed the deal.

Yanukovych had made a trip to Moscow earlier this month for secret talks with Putin.

A senior adviser to Lithuanian President Dalia Grybauskaite, whose country holds the EU's rotating presidency, said Russia had threatened to cut imports from eastern Ukraine.

"President Yanukovych cited these reasons during a telephone conversation with President Grybauskaite this week," Jovita Neliupsiene told AFP.

"Ukraine has not withstood economic pressure and blackmail."

The Association Agreement, which is seen as a first step to eventual EU membership, came with a major free trade deal that would have made Ukraine's membership of the Customs Union impossible.

EU officials have warned that failing to sign the agreement will close a window that may not open again for several years, with the EU Commission set to be renewed in 2014 and Ukraine facing presidential elections in 2015.

EU envoys Aleksander Kwasniewski and Pat Cox, who visited Ukraine more than two dozen times in a bid to broker the deal, expressed "deep disappointment" at the "unilateral" decision of the Ukrainian government.

On Friday, the envoys once again met with Tymoshenko who is undergoing treatment in the eastern city of Kharkiv and told her supporters they would not abandon her.

"Hope springs eternal," said Kwasniewski.