MOSCOW, Jan. 8 (Xinhua) -- Russia will charge Ukraine full market price for natural gas and is prepared to pay a market rate for gas transit via Ukraine, Prime Minister Vladimir Putin said on Thursday.

    "We believe Ukraine must pay a market price and we are ready to pay a market-based fee for gas transit," Putin told journalists at his residence outside Moscow.

    The market transit rate in Europe is 3.4 U.S. dollars for 1,000cubic meters per 100 km, Putin said. Russia paid a price of 1.6 dollars for gas shipped through Ukraine in 2008 in line with a contract valid till the end of 2010.

    "While we sold gas to the Europeans for 100, 150, or 200 dollars per 1,000 cubic meters, Ukraine paid 40 to 50 dollars for it," Putin said, indicating that Russia's subsidies to the Ukrainian economy since the collapse of the Soviet Union have reached about 47 billion dollars.

    The prime minister added that Russia will resume gas supplies to Europe through Ukraine once the mechanism to monitor Russian gas transit begins to work.

    Russia cut off gas supplies to Ukraine on Jan. 1 after the two countries failed to reach an agreement on gas prices for 2009, and ceased deliveries to Europe through Ukraine entirely on Wednesday after accusing Kiev of "stealing" the transit gas.

    About a quarter of the gas used in the European Union -- more than 40 percent of the bloc's imports -- comes from Russia.

    Ukraine sits on the main transit route for Russia's gas exports, with about 80 percent of Russian gas supplied to the EU passing through the Ukrainian territory.

    A similar dispute over gas prices between Kiev and Moscow erupted in 2006 when Gazprom cut all gas supplies to Ukraine, raising deep concerns among European customers.