The move by the Estonian town Narva has caused fears of ecological damage in the Russian border town of Ivangorod.

Ivangorod and Narva share the same water distribution network, built after World War II when both towns belonged to the former Soviet Union.

Million dollar bill

According to Russian news agency reports, Ivangorod owes more than $1m to Narva, to which it sends all sewage and which supplies 25% of its water.

Ivangorod says it has enough wells to provide fresh water, but does not have any water treatment plant.

Cancelling the contract could have serious environmental consequences.

The mayor of Ivangorod, Anatoly Potapov, said that lack of running water could force the city's 13,000 citizens to dispose of waste into the Narva river which runs between the two towns and into the Gulf of Finland.

Narva last year reduced water supplies to Ivangorod by 25%, and then by another 5%, in a bid to force the town to pay its bill.

In November, water supplies were completely cut off for 10 days.

At the time, the Estonian Government agreed to pay some money towards the bill to avoid ecological problems.

Narva and Ivangorod, located some 125 miles (200 kilometres) east of the Estonian capital Tallinn, shared Narva's water system when Ivangorod was considered part of Estonia.

With the collapse of the Soviet Union in 1991, the towns were split politically.

Ivangorod returned to Russia, and began having to pay for its water.