The dramatic changes, which prime minister Sergei Kiriyenko denied amounted to a devaluation or a default, come in response to overwhelming negative market sentiment that have sent Russian shares plunging in recent weeks.

"The measures are tough and fairly radical," Kiriyenko told a news conference. "They are tough but adequate."

In a statement, Anatoly Chubais, Russia's chief foreign debt negotiator and leading economic policy maker, said:

"I consider today's actions taken by the Russian government an adequate and timely response to the extremely difficult Financial situation which was threatening the economic and political stability of the country."

Russian President Boris Yeltsin, who has been on holiday for the past month, on Friday vowed there would be no devaluation of the rouble. The rouble devaluationand the likely boost in inflation it would ignite are direct blows against the two major economic achievements of Yeltsin's presidency.

Kiriyenko met Chubais, central banker Sergei Dubinin and finance minister Mikhail Zadornov on Saturday to chart a new economic programme amid the crisis.

"As a result of the worsening external economic situation and unsatisfactory state of affairs with budget revenues the problem of managing the government debt has sharply worsened," the government and central bank said in a statement.

The statement said Russia could keep the value of the rouble in the six to 9-1/2 range per dollar until the end of the year. It has been trading at a little more than six to a dollar this year.

Asked if Russia had devalued the rouble, Kiriyenko said: "No, it is impossible to say. It is a new approach to currency policy."

But the actions amounted to an acknowledgment that the Russian government could no longer defend the rouble against market pessimism that the currency would bedevalued.

"It's tantamount to devaluation," said Charles Blitzer, chief emerging markets economist at Donaldson, Lufkin & Jenrette in London. "We'll have to see whether the authorities can keep the devaluation controlled or not."

In separate statements, both the finance Minister and the central bank chief said the moves were intended to protect ordinary citizens and domestic producers from a market gone haywire.

Russia announced it was halting payments of foreign debts for 90 days and banning foreigners from investing in short-term treasury bills. The T-bills were to be converted into new securities, with the terms of the exchange to be announced on Wednesday.

Until the exchange, trade in bills and bonds is suspended, the statement said.

The central bank ordered an hour's delay of rouble-dollar trade on the Moscow Interbank Currency Exchange (MICEX) until 0700 GMT, a MICEX official said.

The government said it was impractical to maintain a daily rouble corridor that sets the trading boundaries forthe currency every day. In recent days the rouble has fallen outside the corridor as both institutions and banks sought to dump their roubles to hedge against possible devaluation.

Finance minister Zadornov said the measures taken were intended to prevent financial speculators from getting rich at the state's expense.

He promised the measures would improve the government's ability to pay its debts to industry, including wages to employees in state industries that have been withheld for months.

The International Monetary Fund, which led the world community in agreeing to loan Russia $22.6 billion last month, said on Monday that its top Russia official John Odling-Smee had arrived in Moscow.