Russia has announced it is pulling back its forces from the border of eastern Ukraine, in a move that has deflated pro-Kremlin separatists in the country's rebel-controlled cities.
President Vladimir Putin has now called on the separatists to postpone a May 11th referendum on independence for the region, which is majority Russian-speaking.
Rebels control several of the towns and cities in the east, demanding independence from Ukraine and voicing their distaste for Kiev's interim government, formed after the ousting of pro-Kremlin president Viktor Yanukovych.
After talks with the head of the Organisation for Security and Cooperation in Europe, Putin said in a statement: "We're always being told that our forces on the Ukrainian border are a concern. We have withdrawn them.
"Today they are not on the Ukrainian border, they are in places where they conduct their regular tasks on training grounds."
Either Putin backs down, or distancing himself from what comes next in already bloody E.Ukraine conflict. 1 step back, 2 steps forward— Maxim Eristavi (@MaximEristavi) May 7, 2014
The Defence Ministry in Moscow would not confirm whether their new positions were near Ukraine.
Putin also issued a raft of warnings to Ukraine that any action against ethnic Russians living within its borders would provoke a response.
Several separatist groups have reacted warily to Putin's statement, and reporters in the eastern Ukrainian town of Donetsk said local television was continuing to broadcast adverts for the referendum.
Somewhat deflated Donetsk referendum leader on Putin comments: "We can't ignore him."— Mike Giglio (@mike_giglio) May 7, 2014
But a representative from the "Donetsk Peoples’ Republic" on Wednesday told Interfax it “accepts the possibility” that a referendum could be delayed.
In the city of Slavyansk, where separatists now have total control of the government buildings, the rebel group had a somewhat muted response.
Ho hum. Wonder if they will listen. Slavyansk rebel spokeswoman says so far "no comment" on Putin's comments.— Roland Oliphant (@RolandOliphant) May 7, 2014
I think by now some rebels may be realising the (Russian) cavalry isn't coming.— Roland Oliphant (@RolandOliphant) May 7, 2014
In a stark contrast to earlier statements, Putin also said on Wednesday that the upcoming Ukrainian elections were "a step in the right direction". He had previously said that the impending Ukrainian elections were illegitimate.
But elections, he continued, "will not solve anything unless all of Ukraine’s people first understand how their rights will be guaranteed once the election has taken place."
Responding to reports of Putin's comments, Prime Minister David Cameron's official spokesman told a 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."
Earlier on Wednesday, 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.
There, he 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.
Hague said that work was being undertaken in Brussels this week to prepare further sanctions against Russia should the situation in Ukraine escalate further.
"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."