The European Union has urged the leaders of rival parties in Ukraine to settle their political disputes, according to Deutsche Welle. But the bloc also said it considers the standoff a domestic issue that doesn`t warrant outside involvement.

The EU`s statement came a day after Ukrainian President Viktor Yushchenko said he was dissolving parliament and calling fresh elections in May. The parliament, which is dominated by Yushchenko`s rival, Viktor Yanukovych, rejected that announcement, saying it amounted to an attempted coup d`etat.

Crisis talks Tuesday between Yushchenko and Prime Minister Viktor Yanukovych failed to yield a compromise between the two rivals, even after Ukraine`s government and parliament voted to defy the president`s orders.

 The presidential office said in a statement that Yushchenko had informed the European Union`s foreign policy chief Javier Solana of his intention to hold snap elections. But Yanukovych, who favours ties with Russia, said pro-Western Yushchenko had made "a fatal mistake" in issuing the order dissolving parliament after months of political impasse.

Hundreds of anti-Yushchenko activists meanwhile camped out overnight in central Kiev to protest against the president and vowed to hold a mass protest on Wednesday.

"No to the Division of Ukraine!" and "The Constitution is the Law for Everyone!" read placards posted up by the activists outside more than 200 tents set up near the parliament building and on Independence Square.

 The German EU presidency expressed concern about the situation in Ukraine. In a written statement, the German foreign ministry called upon the two sides in the conflict "to settle their current differences on domestic policy in a manner which complies with the constitution and domestic rules."

 But the EU does not plan to intervene. "We do not consider the situation at the moment to need influence from outside," European Commission spokeswoman Christiane Hohmann said. "We think it`s a domestic affair that needs to be sorted out in Ukraine itself."

 Adherents of both the pro-Western Yushchenko and the more Russia-oriented Yanukovych continue to stage protests in the Ukrainian capital Kiev.

Yushchenko was swept to power in January 2005 after a bitterly contested election against Yanukovych and waves of popular street demonstrations that became known as the Orange Revolution. But he was forced to accept his rival as prime minister after he and his allies failed to secure a parliamentary majority in a national election in 2006.

 Yushchenko accuses Yanukovych of trying to encourage individual parliamentary deputies to switch allegiances, something he says is forbidden under Ukraine`s constitution. But critics of Yushchenko say he himself refuses to accept limitations on the power of the Ukrainian presidency put in place in 2005.

 The two men have clashed repeatedly since Yanukovych became prime minister, and it is unclear whether a new election would do anything to end the impasse.

 Political chaos in Ukraine would be a major worry for the EU since it is one of the largest countries in Eastern Europe and one that is home to pipelines supplying western Europe with Russian gas. 

The EU presidency was careful to point out on Tuesday that it hoped negotiations for closer ties between the EU and Ukraine would not be affected by the current political stalemate.