The Russian foreign minister explained the decision
Russia has expelled two Canadian diplomats working for Nato's Moscow office in response to an "unfriendly act" by the military alliance.
Last week Nato expelled two Russian envoys from its headquarters in Brussels, reportedly due to spying.
Nato said in a statement that the Russian move was unjustified and "very unfortunate and counterproductive".
The diplomatic spat came as Nato began military exercises in Georgia, seen by Russia as a "provocation".
Last August Russian and Georgian forces clashed in a brief war over breakaway pro-Moscow Georgian territories.
Nine months after the war in Georgia relations between Russia and Nato were supposed to be getting back on track, says the BBC's Rupert Wingfield-Hayes in Moscow.
Instead, they have taken a sudden and dramatic turn for the worse, our correspondent reports.
Canada said Nato had been seeking to re-engage Russia
Ottawa's ambassador to Russia, Ralph Lysyshyn, was summoned to the foreign ministry where he was told Moscow felt it had been forced into the move.
"In response to the unfriendly act on Nato's part... the Russian side has taken the forced decision to revoke the diplomatic accreditation" of the two Nato staff, a foreign ministry statement said.
The Canadian diplomats being expelled are the director of the Nato information office in Moscow, Isabelle Francois, and her deputy.
The Canadian embassy in Moscow said it regretted Russia's decision which came, a spokesman said, just as "Canada and Nato allies have been seeking to re-engage Russia".
In Brussels, Nato said: "The Russian measure is very unfortunate and counterproductive to our efforts to restore our dialogue and cooperation with Russia.
"Thus Nato very much regrets the Russian action and does not consider there to be any justification for it."
The latest round of tit-for-tat expulsions stems from a spy scandal in which thousands of pages of sensitive data were allegedly handed to Russian agents by an Estonian official serving at Nato headquarters.
Cooperative Longbow 09, a Nato-led coordination and command exercise, began on Wednesday outside the Georgian capital, Tbilisi.
A further exercise, Cooperative Lancer 09, is planned before 1 June.
About 220 troops are involved in the first exercise and 400 in the second, and neither involves tanks, Reuters news agency reports.
Nato says both exercises were planned before last summer's war in Georgia.
Four non-Nato states originally due to take part have pulled out. Armenia, Kazakhstan, Moldova and Serbia all have close links to Russia.
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