The move, one day after President Boris Yeltsin signalled that Russia might intervene to protect the rights of the Russian population in Estonia, was quickly condemned by Mart Laar, the Estonian Prime Minister. He said that the decision could force companies out of business and lead to higher unemployment.
Although the move appeared to be politically motivated, Sergei Kazmin, a spokesman for the Russian Gazprom concern, said the reason was economic. Estonia had not yet paid for gas delivered over the past two-and-a-half months, he said, and now owed Russia 11m marks (pounds 6.4m).
In Estonia the news came as a shock. In a television interview, Mr Laar urged Estonians not to panic. He stressed that there were reserves of gas and that the government was 'keeping the situation under control'.
Since regaining its political independence in 1991, Estonia has tried to break its economic links with Moscow by finding new suppliers of raw materials and energy. It has already started importing some gas from neighbouring Scandinavian countries, but the bulk of its supplies still come from Russia. The country's energy needs are still met primarily by Russia, which has frequently threatened to cut oil supplies over what it considers to be the systematic abuse of ethnic Russians' human rights.
Relations between the two countries nose-dived on Monday after the Estonian parliament passed a new law on nationality and residency rights. This means the hundreds of thousands of ethnic Russians brought into the country after it was annexed by Stalin in 1940 - who now make up almost a third of the 1.6 million population - will be classified as foreigners. They have been given two years to apply for residence permits and to choose whether to be Russian citizens or to apply for Estonian citizenship. Failure to comply with the law could lead to expulsion from the country.