THE Department of Trade and Industry was warned at least four years ago that relying on imported gas would render the British economy vulnerable to disruption from Russia, The Scotsman has learned.

The revelation came as the government admitted yesterday that Russia's gas dispute with Ukraine could hit British households and businesses with even higher energy prices.

On Sunday, when Russia cut supplies to Ukraine, the DTI said there was "no immediate threat" of price rises.

And in another risk to western European economies, Norway, Britain's biggest gas supplier, warned it would not be able to increase output to meet any shortfall from Russia.

Britain is now a net importer of gas, which has become the country's single biggest source of power.

Dependence on foreign supplies is set to grow: some estimates suggest that by 2020, at least 90 per cent of gas used in Britain will be imported.

That reliance on imports has raised fears that Britain's broader national interests could be jeopardised by the need to maintain trading relationships with countries such as Russia.

Much of the Russian gas sold to Europe is piped across Ukraine, and following the Russian move on Sunday, several European countries say their gas supplies have fallen.

Brian Wilson, the energy minister at the DTI during the last parliament, repeatedly raised fears that by banking on foreign gas supplies, the UK would be exposed to just the sort of shock now emanating from Russia.

Last night, Mr Wilson told The Scotsman that the difficulties caused in Britain by the Russian conflict with Ukraine illustrated the "foolishness" of ignoring such warnings.

"I remember having these discussions at the time, saying: 'Hang on a second, do we really want to be so dependent on Russia?'" Mr Wilson said.

"The answer from the officials was always: 'Oh, Russia has never defaulted on a contract'. The attitude was that it will be all right on the night.

"The presumption has been that Russia would always be a reliable supplier, but how can that be guaranteed? No-one knows who's going to be in charge in Russia in ten or 15 years' time."

Britain's current energy "mix" was determined by the government's energy white paper in 2003. Currently, gas-fired power stations generate about 37 per cent of UK electricity. Coal power stations produce about 35 per cent, nuclear reactors 22 per cent and renewables, such as wind and solar power, account for about 5 per cent.

Mr Wilson left parliament last year. Although he was in office when the white paper was drawn up, he privately argued in 2002 and 2003 that Britain should derive less energy from imported gas.

"But the policy was being made in reverse," he said yesterday. "The growing dependence on gas had to be allowed in order to rationalise the rundown of coal."

The problems now being caused by Russia's move, Mr Wilson said, "emphasise the foolishness of becoming dependent on imported gas".

Lord Howe, the former Tory foreign secretary, echoed that concern yesterday. "It's becoming very clear that Europe is beholden to Russia because Russia is a such a big gas supplier," he said.

As a result, Russia was in a very strong position, he added.

The 2003 white paper was published a month before the start of the war in Iraq. Tony Blair, the Prime Minister, paid little attention to the paper, leaving Patricia Hewitt, then trade secretary, and Margaret Beckett, environment secretary, in charge.

The Prime Minister is now understood to regret that and has effectively reopened the debate about energy policy, with a new government review expected to report in the summer.

The review is likely to back the building of a new generation of nuclear power stations, and the Russian row has only strengthened the hand of nuclear advocates in government.

The energy paper is also expected to call for clear rules on gas imports to ensure that no one supplier becomes vital to Britain's needs. That could mean constructing new pipelines and other supply routes from nations including Canada, and regions including North Africa and South America. Since the Russian crisis arose, the DTI has been at pains to stress that Britain sources most of its gas from more stable countries - particularly Norway - and none from Russia.

But since Russia does supply about a quarter of the gas used in continental Europe - some of it piped across Ukraine - shortages in those countries will leave them less able to sell gas on to Britain. The Russian move can therefore drive UK prices up. On Sunday, Malcolm Wicks, the energy minister, insisted that there was "no immediate threat" to British prices from the Russian move.

Yesterday, the minister admitted that there could indeed be financial consequences for the UK, albeit on a smaller scale than those being faced by other European nations.

"We are increasingly talking about a European or a global energy market, so there's always a worry about knock-on effects," he said. "This is a difficult winter throughout Europe.

"It's colder than average, and for various reasons in Britain we have got quite a tight equation between demand and supply.

"We need to look at this one very carefully, but we are not a heavy importer of gas from Russia, so the effects here should be less than elsewhere."

Despite Mr Wicks's assurances, Britain's biggest gas supplier, Norway, said last night it could provide little relief.

"Deliveries of natural gas from the Norwegian continental shelf are now at an all-time high," the country's energy ministry said, warning that gas production capacity was "fully utilised".

Statoil, the biggest Norwegian gas company, said there was "no slack" available in its production network.

European Union ministers and officials will meet in emergency session in Brussels tomorrow to discuss how to respond to the Russian-Ukrainian dispute.

The Organisation for Security and Co-operation in Europe also stepped in last night to urge Russia and Ukraine to resolve their dispute.

Karel de Gucht, the Belgian foreign minister, whose country currently holds the OSCE presidency, appealed to "all parties to pursue their discussions and to explore, in a constructive manner, all options that could bring about a mutually satisfactory solution".

Despite current concerns, some diplomats are optimistic that Moscow will seek to resolve the dispute quickly - mindful of the need to preserve its reputation as a reliable supplier.

As this year's president of the Group of Eight industrialised economies, Russia's president, Vladimir Putin, has said secure energy supplies are at the top of his agenda.