The European Commission is threatening legal action against Russia and Ukraine's state-owned gas firms over the dispute that has led to a shortfall in European supplies.

Several European countries have experienced shortages as a result of the price dispute between Gazprom and Naftogaz.

EC president Jose Manuel Barroso is now warning that he will recommend legal action against the firms if EU-sponsored agreements are not honoured "as a matter of urgency".

Russia says it resumed supplies to Europe yesterday morning after Ukraine agreed to allow independent monitors oversee the flow of gas to ensure it was not being stolen by the Ukrainians.

However, it says Ukraine blocked the flow of gas westwards to Europe.