HOWZAT

He had added that the exhibition would now return from Germany, where it has been on display in Düsseldorf. The Royal Academy's show, one of its most eagerly anticipated in years, had been due to open on January 26.

Britain still rejects Russia's claims and insists that the artworks are fully protected against legal claims under existing legislation, principally the State Immunity Act of 1978, which safeguards overseas state property in Britain.

The new provision has been rushed through specifically to address Moscow’s concerns.

Russia has said before that it would not lend works to countries without anti-seizure laws after 55 paintings held by the Pushkin Museum were briefly impounded in 2005 while on loan in Switzerland. Britain is one of the few European countries without such a law. The new provision will correct this anomaly.

The involvement of Russia's Foreign Ministry in the discussion in Moscow has raised suspicions that the decision not to send the paintings to the UK was linked to the Litvinenko affair.

Sergei Lavrov, the Russian Foreign Minister, has already acknowledged that a demand for the British Council to cease operations outside Moscow from January 1 was linked to the expulsion of four Russian diplomats from London in July.

Mr Miliband angered the Kremlin still further last week when he compared Russia to Iran and Burma, the only two countries that ban the British Council.

In a weekend posting on his blog he linked the move against the council to the From Russia exhibition, contrasting Britain’s welcome for Russian culture with the Kremlin’s decision, which he said was “illegal, hurts Russians, and damages Russia’s image abroad”.

Relations between Russia and Britain are at their worst since the end of the Cold War and show no sign of improvement. The two sides are heading for a showdown in the new year over the British Council's offices in St Petersburg and Ekaterinburg, which have said that they will defy the Russian order to close.

President Vladimir Putin has rejected British demands to hand over Andrei Lugovoy, the man wanted for the murder of Mr Litvinenko. Mr Lugovoy now sits in the Duma, Russia's parliament, after winning a seat in this month's elections.

From Russia: French and Russian Master Paintings 1870-1925 from Moscow and St Petersburg draws on work from Russia’s four principal state collections: the Pushkin Museum, the Tretyakov Gallery, the Hermitage Museum and the Russian Museum. It explores the links between French and Russian art during a period that witnessed some of the most important developments in modern art, including Impressionism.

The star of the exhibition would have been The Dance by Matisse. Some of the greatest works by Renoir, Cezanne, Van Gogh and Gauguin would have been displayed next to those by Kandinsky, Malevich and Chagall. Many have never been seen outside Russia before and the exhibition was considered so important that President Putin and Gordon Brown had been invited to contribute forewords to the catalogue.

Cancellation would be a severe blow to the Royal Academy, which spent two years planning the show and had expected to earn at least £5 million from ticket receipts and merchandising. It has no alternative exhibition to put in its place.

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