Ukraine's coup-imposed government announced the formation of a 60,000-strong "national guard" to boost its military .

The rump parliament voted to establish the armed body under the control of the Interior Ministry.

It would be made up of "military units that are loyal to the new regime and self-defence units from Independence Square," a government source said.

"Interim president" Oleksandr Turchynov proposed the measure on Tuesday, arguing that the military had to be rebuilt "from scratch."

But the new militia would have a wider than military role, being involved in the suppression of "terrorism" and crime - and to "protect the country against all citizens," in Mr Turchynov's words.

Most of the armed "self-defence units" the government plans to involve in the national guard belong to a plethora of fascist groups which provided the muscle for the overthrow of Victor Yanukovych's elected government last month.

Far-right anti-semitic party Svoboda is playing a key role in the new government, with four ministerial posts including defence, while Kalashnikov-toting members of even more extreme sects such as Right Sector took over many towns and villages in western Ukraine during the uprising against Mr Yanukovych.

Formalising their role in a national organisation may indicate that the new authorities are unable to disarm the groups.

Outside Ukraine, the war of words between Russia and the West continued, with German Chancellor Angela Merkel warning of "massive" political and economic consequences if Moscow does not enter "negotiations that achieve results."

And she insisted that the "territorial integrity of Ukraine is not up for discussion," putting her at loggerheads with the Russian parliament which has said it will accept a referendum in the Crimea planned for this weekend on unification with Russia.

Polish Prime Minister Donald Tusk said sanctions on Russia could start "on Monday," but Russian Economic Development Minister Aleksey Ulyukaev said Moscow would respond with its own sanctions and could increase trading with currencies other than the US dollar.