Russian President Dmitry Medvedev has told Russia's state-controlled gas monopoly Gazprom to cut supplies to neighbour Belarus over its debt.
Last week, Mr Medvedev warned Belarus that unless it paid off its gas debts within five days, it would face cuts.
Gazprom says Belarus owes about $200m (?134m; 160m euros) after failing to pay increased prices.
Belarus has challenged the Russian claim and refused to pay.
Belarus remains heavily dependent on Russia to meet its own energy needs, and a considerable proportion of Russian oil and gas exports to Europe pass through it.
Gazprom's chief executive Alexei Miller was quoted as saying that supplies to Belarus would be cut gradually.
Gas supplies will be reduced "day-by-day, proportionally to the debt's volume", Mr Miller said, according to Ria Novosti news agency.
Belarus has recently complained of financial difficulties.
Russia and Belarus are supposed to be close allies, but have had several rows in recent years, particularly over energy supplies, correspondents say.
Mr Miller said on Monday that Belarus admitted having the debt.
"But it proposes to pay it with machinery, equipment and various other products," Mr Miller said.
Belarus insists Russia provide it with cheap oil and gas as part of a customs union deal.
Last week, Belarus President Alexander Lukashenko said his country owed nothing to Gazprom, but would settle any disagreement.
Belarus wants to settle any outstanding debt at last year's lower prices.
Russia increased the price of gas supplied to Belarus from $150 per 1,000 cubic metres of gas last year, to $169.20 in the first quarter of 2010 and $184.80 in the second.
But Belarus has continued to pay at $150.
Gazprom said at this rate it could owe $500m or $600m by the end of the year.
Russia has not been afraid to cut supplies to countries it accuses of falling behind in their payments.
In January 2006 and again in 2009, Russia cut gas supplies to Ukraine, causing knock-on effects all over Europe.
In January this year, a row nearly resulted in Russian oil deliveries to Belarus being halted.
Russia's critics have accused it of using its energy supplies as a political weapon.