Mykola Azarov, Ukraine's prime minister, resigned on Tuesday and was replaced by his deputy, the latest attempt by the administration of President Viktor Yanukovich to defuse an escalating two-month stand-off with anti-government protesters.
In a statement posted on the government website, Mr Azarov, a longtime Yanukovich loyalist and prime minister since 2010, explained his decision as being driven in the spirit of "compromise" and desire for a "peaceful resolution to the conflict".
"The conflict situation which has emerged in the nation threatens the economic and social development of Ukraine, and carries with it a threat towards all of Ukrainian society and each citizen," Mr Azarov said.
Mr Yanukovich accepted the resignation and ordered all ministers to remain in post as acting ministers until a new government is formed. Mr Azarov will be replaced by Serhiy Arbuzov, the first deputy prime minister, as acting prime minister, according to a statement from Mr Azarov's office.
Mr Arbuzov, 37, is a former central bank chief and personally close to the Yanukovich family.
People familiar with the situation in Kiev said that Russia was signalling it might reconsider the bailout it agreed for Ukraine's ailing economy last month, depending on the make-up of the new government.
One Ukrainian official said that if the political shake-up led to Kiev renewing talks on an integration agreement with the EU, the cancellation of which triggered the crisis, then "the risk exists" that Russia would not proceed with a scheduled purchase of $2bn of Ukrainian bonds announced on Monday. Russia bought a first $3bn tranche of bonds last month.
In its bailout out of Ukraine's faltering economy, Moscow has promised to buy $15bn in bonds and offer natural gas price discounts worth $5bn.
But Vladimir Putin, Russian president, denied any link, insisting at a press conference in Brussels after a summit with EU leaders that Moscow "did not tie this specific loan to any terms and conditions" but "agreed on structural reforms in return for the loan".
"Both the loan and any sort of reduction in gas prices - whether on a monthly or quarterly basis - are based not on any desire to support a particular government in Ukraine, but rather to support the people in Ukraine," Mr Putin said. "It is the people who suffer when the powers that be fight."
Separately, in line with compromise talks between pro-presidential and opposition politicians, Ukraine's parliament voted by 361 votes to two to repeal controversial anti-protest legislation adopted on January 16 which imposed hefty fines and lengthy jail sentences on myriad protest activities.
It remained unclear who would replace Mr Azarov as prime minister and what further compromise agreements both sides would agree upon to defuse Ukraine's worst crisis since independence in 1991.
Mr Azarov's offer came hours after Mr Yanukovich late on Monday made a further concession to anti-government protesters, agreeing to repeal harsh anti-protest laws adopted this month that inflamed the demonstrations against him.
On Monday, the fourth day of crisis talks between the president and opposition leaders, it was agreed that parliament would hold a vote of no-confidence in the government, and to work towards potentially reinstating an earlier constitution that boosted parliamentary powers and curtailed those of the president.
Mr Yanukovich's administration also offered to grant amnesty to all protesters if they retreated from seized buildings in central Kiev and other cities, while also clearing streets for traffic in the capital. But the offer was unlikely to be accepted by protesters still calling for snap presidential and parliamentary elections.
In another sign that the two sides remained far apart on many issues, opposition leaders Arseniy Yatseniuk and Vitali Klitschko officially refused Mr Yanukovich's offer made on Saturday to head a new government.
© The Financial Times Limited 2014. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation