Russia`s state gas giant Gazprom on Tuesday announced it had signed an agreement with Ukraine to settle a gas payment dispute that had raised fears in Europe of possible disruptions in supplies, according to AFP.

"An agreement on settling the debt for gas to Ukraine has been signed," Gazprom said in a statement after a meeting between Gazprom CEO Alexei Miller and Ukrainian Energy Minister Yury Boiko.

Under the deal, the debt will be paid in full by November 1, Gazprom said.

Gazprom had earlier threatened to cut off supplies to Ukraine this winter if the ex-Soviet country did not pay a 1.2-billion dollar (855-million euro) debt for supplies in 2007.

Ukrainian Prime Minister Viktor Yanukovych, who favours closer ties with Russia, flew to Moscow on Tuesday for energy talks with his Russian counterpart Viktor Zubkov and President Vladimir Putin.

Critics have accused Russia of using gas supplies as a political weapon against Ukrainian President Viktor Yushchenko, who aims to wrest his country from Russia`s orbit and towards membership of the European Union and NATO.