Putin made the declaration whilst sharing a platform with Ukrainian leader Viktor Yushchenko.

The two leaders had met to resolve a long running dispute involving the supply of gas.

Whilst there is little popular support for Nato membership in Ukraine, Yushchenko has made no secret of his ambitions to join the alliance.

"That of course is Ukraine's internal process and we don't have the right -- and we won't interfere in this process," said Putin.

But, he added, 'that raises the question for Russia of the need for retaliatory actions.'

"It's frightening not just to talk about, but even to think about, that in response to such deployment, the possibility of such deployments -- and one can't theoretically exclude these deployments -- that Russia will have to point its warheads at Ukrainian territory," he said.

"Can you imagine that for a second? That is what we are concerned about."

Yushchenko responded by stating that Ukraine was entitled to dicate their own foreign and defense policies.

But he also emphasised that the Ukrainian constitution does not allow foreign military bases on their soil.

"You understand well that everything that Ukraine does in this direction is not in any way directed at any third country, including Russia," Yushchenko said.

Putin's remarks will cause concern around the world, especially after recent comments he made in a speech to the Russian State Council.

Last week, he warned that a 'new phase in the arms race is unfolding in the world' -- a move that some saw as an assertion that Russia was firmly back on the world stage.

In Ukraine, politicians backed Yushchenko's stance on Putin's comments.

"We are an independent state and will make our decisions regardless of what others say," said former defence minister Anatoly Grytsenko, a senior member of Yushchenko's party.

Putin's pronouncement came on the same day as it was revealed that he would be attending April's Nato summit in Bucharest, Romania.

"This yet again testifies to the fact that Russia is open to dialogue on any issue," said Russian foreign minister Sergei Lavrov.