The proposal was made by the Greek-Cypriot President Glafcos Clerides, when he announced that he would not go ahead with the deployment of the S-300 missiles on Cyprus itself.

Turkish Foreign Minister Ismail Cem said: "Deploying these missiles on the Greek island of Crete would be a big mistake.

"This would exacerbate the tension between two neighbouring countries," he said in a reference to Turkey and its arch rival Greece.

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Cyprus bought the missiles from Russia last year, but has been put under immense pressure from Turkey.

The government in Ankara had threatened to destroy the missiles if they were deployed on Cyprus, one-third of which is under Turkish occupation.

Decision 'furthers peace settlement'

Glafcos Clerides: Negotiating with Greece to put missiles on Crete

President Clerides' climbdown, announced on Tuesday, was welcomed by international officials who have been trying to broker a peace settlement between the two communities on Cyprus.

They said it would reduce tensions with the Turkish Cypriots and would help the faltering peace process.

British Foreign Secretary Robin Cook said, "This decision ... helps create the conditions necessary for securing a just and lasting political settlement to the Cyprus problem," he said.

Austrian Foreign Minister Wolfgang Schuessel, whose country currently holds the EU presidency, said the decision showed that Cyprus was fit for European Union membership, for which it began negotiations last month.

But Turkey said it was a victory for its strong opposition. "This story of the S-300 missiles has become a tragicomedy," Mr Cem told Turkish television. "The non-deployment of these missiles is the fruit of Turkey's determination."

The Turkish media applauded the Greek Cypriot climbdown. "The power of Turkey," proclaimed the newspaper Hurriyet in a banner headline.

Political disarray

Mr Clerides is now facing criticism from within his governing coalition that he has given in to pressure. A junior coalition partner, the Socialist party, is expected to withdraw its ministers from the government.

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Mr Clerides said he had taken the responsibility of the decision himself because there had been no unanimity among Greek-Cypriot politicians.

Western countries have been concerned that the arrival of the S-300 missiles could further escalate tensions on the divided island and trigger a conflict between Greece and Turkey, allies in NATO but fiercely defensive of their ethnic kin on Cyprus.

Cyprus has been split into rival Turkish and Greek Cypriot zones since Turkey invaded the northern third of the island in 1974 in response to an Athens-backed coup aiming to unite the island with Greece.