Russia said it would deliver a response today to Britain's decision to expel four of its diplomats.
Britain said yesterday it would expel four Russian diplomats and halt co-operation in easing visa regulations in retaliation for Russia's refusal to extradite the prime suspect in the murder of Alexander Litvinenko in London in November.
The Russian Foreign Ministry has described London's actions as "immoral" and "provocative" and promised to respond appropriately.
Most Russia watchers believe Moscow will mirror London's actions with its own expulsions or another political step.
The big question was whether the Kremlin might also hit back at British business interests in Russia, but the natural resources minister, Yuri Trutnev, said there were no such plans.
"I don't think it makes sense to impose restrictions that would affect the investment climate, because that would be very expensive, including for Britain," Russian agencies quoted him as saying.
Mr Litvinenko, a former Russian intelligence officer who became a critic of Mr Putin's, died in a London hospital after he was poisoned by highly radioactive polonium.
British prosecutors have accused Russian businessman Andrei Lugovoy - also a former intelligence officer - of carrying out the poisoning and have demanded his extradition to face trial in Britain. Russia has refused, quoting a constitutional ban on extraditing its own citizens.
Russian media described Britain's response as a declaration of diplomatic war.