Putin kicks out four British diplomats in Russia's revenge

Moscow declared the four "persona non grata" and also suspended co-operation on the fight against terrorism.

But the sanctions fell far short of the threats issued over the past three days by Vladimir Putin's government, prompting speculation that he has backed down.

Amid a row which has left relations with the Kremlin at their worst since the Cold War, Mr Putin last night appeared to hold out an olive branch by announcing that the two countries could overcome the "mini-crisis".

Earlier this week, Britain expelled four Russian diplomats following the Kremlin's refusal to extradite Andrei Lugovoy, the chief suspect in the radiation poisoning of dissident Alexander Litvinenko.

Mr Putin had initially promised "the most serious consequences", including the ejection of up to 80 British diplomats.

Yesterday Russia remained adamant that it would not allow Mr Lugovoy to be sent to Britain for trial.

Foreign Secretary David Miliband, who was winning plaudits for the way he has handled the first test in his new job, expressed disappointment over what he said were the "completely unjustified" expulsions of British officials.

However, the high- stakes gamble by Mr Brown and Mr Miliband appeared to be paying off, as Mr Putin said "common sense" would prevail.

"I think relations between Russia and Britain will develop normally because both countries are interested in this," he said.

Government sources expressed private relief that the Russian response had been less severe than expected.

Russia announced it would also stop issuing visas to British officials and cease cooperation on counterterrorism.

But Whitehall sources claimed co-operation with Moscow on terrorism issues was fairly limited, and revealed that Britain had told Russia privately earlier this week that it would no longer have contact with the FSB - the successor to the KGB.

The FSB has a co-operation agreement with the FBI but no such formal agreement exists with MI5.

Russian foreign ministry chief spokesman Mikhail Kamynin told reporters the British ambassador had been summoned and handed a note "in connection with the unfriendly actions of Britain towards Russia".

He said: "Four British embassy staff in Moscow are now persona non grata and they should leave the territory of the Russian Federation within ten days."

He did not identify the diplomats, but Russian sources said they played a role in the "spy rock" revelations last year, when the Kremlin accused MI6 agents of using a transmitter hidden in a fake rock in a Moscow park to pass confidential information.

Litvinenko, a former Russian security agent who became a bitter critic of the Putin regime, died a lingering death after his tea was poisoned with radioactive polonium during a meeting in a London hotel last year.

British security sources believe he was the victim of a Russian hit squad.

Russian officials have responded indignantly to British suggestions that they should change their constitution to accommodate the extradition request, pointing out that Britain has turned down numerous Russian requests in recent years.

Mr Lugovoy denies the charges and blames British intelligence for the murder.

Britain has won the support of the European Union and US Secretary of State Condoleezza Rice, who called on Russia to "co-operate fully".

On Wednesday, Londonbased billionaire Boris Berezovsky, one of Putin's fiercest critics, accused the Kremlin of trying to kill him.

Police said they arrested and deported a Russian man in connection with a murder plot.