The self-declared mayor of a separatist-held town in eastern Ukraine said today he would discuss the release of detained military observers with the West only if the European Union dropped sanctions against rebel leaders.

Vyacheslav Ponomaryov, the de facto mayor of Slaviansk, told Interfax news agency the imposition of visa bans and asset freezes against Denis Pushilin, leader of the self-styled People's Republic of Donetsk, and Andrei Purgin, another leader in the eastern region, "was not conducive to dialogue".

The six observers were in Ukraine under the auspices of the Organization for Security and Cooperation in Europe (OSCE), a democracy watchdog. They were detained last week after separatists said they had found a Ukrainian spy with them.

"We will resume dialogue on the status of the prisoners of war only when the European Union rejects these sanctions," he said. "If they fail to remove the sanctions, then we will block access for EU representatives, and they won't be able to get to us. I will remind my guests from the OSCE about this."

The EU has imposed asset freezes and travel bans on 15 Russians and Ukrainians over Moscow's annexation of the Crimea region and what Brussels says is its support of the separatist campaign.

Moscow says it has played no role in the uprising in Ukraine's east and that Russian-speaking citizens have occupied administrative buildings to demonstrate their concern that their rights would be violated by the pro-Western government in Kiev.