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Hague hits at Moscow 'provocations'
Britain responded with caution to Russia's announcement that it was pulling back troops from the Ukrainian border.
Russian president Vladimir Putin said that the troops have returned to their training grounds and other locations for "regular exercises", but the Defence Ministry in Moscow would not confirm whether their new positions were near Ukraine.
Mr Putin also urged Ukraine's military to halt all operations against pro-Russian activists who have seized official buildings in towns across eastern Ukraine and called on the separatists to postpone a referendum on autonomy planned for May 11.
Responding to reports of Mr Putin's comments, Prime Minister David Cameron's official spokesman told a regular Westminster media briefing: "The test of this is what happens on the ground and de-escalation on the ground. We want to see de-escalation but I think the test remains to see a difference on the ground."
The development came as Foreign Secretary William Hague met candidates in Ukraine's May 25 presidential elections, as well as OSCE peacekeepers, during a visit to the capital Kiev.
Mr Hague accused the Kremlin of orchestrating "conflict and provocations" in the east and south of the country and mounting an "enormous propaganda effort" in the hope of disrupting the elections. It was clear that insurgents manning road-blocks and occupying buildings in parts of eastern Ukraine came from Russia, he said. He commended the "restraint and judgment" shown by the Ukrainian authorities in response.
The Foreign Secretary told a press conference in Kiev: "It is clear that the leading elements of these forces - it is clear to us from their training, their equipment, their identical behaviour to infiltrators in Crimea - are not simply pro-Russian forces. Parts of them have been Russian forces, not just pro-Russian. I think that is common sense, that is quite obvious.
"They have added to their strength with other recruits and there are widespread and credible reports that many of these are actually hired thugs of one kind or another.
"They are not representative, from what we have heard and seen, of local people. There should be no doubt that the Russian government is trying to orchestrate conflict and provocations in the east and south of Ukraine and that the immediate goal is the disruption of elections on May 25."
The Ukrainian people should "demonstrate their rejection of forces that are threatening to tear this country apart", said Mr Hague. He called on all Ukrainians to participate in the May 25 elections to find a replacement for ousted pro-Russian president Viktor Yanukovych "so that the true voice of the Ukrainian people is heard loud and clear".
Mr Hague said that work was being undertaken in Brussels this week to prepare further sanctions against Russia should the situation in Ukraine escalate further. The European Union has already imposed asset freezes and travel bans on a number of key figures in Mr Putin's administration, but has not yet moved to the wider economic and trade sanctions threatened if Moscow takes further moves to ramp up the conflict.
"We will be ready to impose those if necessary," said the Foreign Secretary.
"We are not saying they are only imposed if there is a military invasion of Ukraine... but nor are we setting a 'red line', because if we do that, Russia can just go up to the red line, knowing that they can escape the sanctions.
"We will have to assess over the coming days and weeks whether Russia is continuing to create instability - certainly Russia is doing that now."
Mr Hague is due to meet counterparts in Brussels on Monday and said he would "argue very strongly that we should be fully ready with those additional sanctions".
He added: "These sanctions are important and they are affecting confidence in the Russian economy. We can see the flight of capital out of Russia, the fall of the stock market. But the very important thing for the Russian leadership to think about is the long-term consequences of this crisis.
"The G7 energy ministers are meeting this week and the United Kingdom is producing ideas, we are circulating them to our European colleagues, on how to reduce over time the energy dependence of European nations on Russia. I think the consequences of this crisis will be reduction of energy dependence.
"Already it has led to Russia's exclusion from the G8. It will lead some Nato nations to adopt increased defence expenditure... Russia will lose economic and political influence as a result of the violation of sovereignty and territorial integrity."