(Adds British reaction, paragraph 16)
By Christian Lowe
MOSCOW, April 16 (Reuters) - Russia announced on Wednesday it would establish legal links with neighbouring Georgia's breakaway regions of Abkhazia and South Ossetia, a move Georgia condemned as a breach of international law.
NATO's chief urged Russia to reverse the decision and a senior U.S. official described it as "political mischief".
Western states are closely allied to Georgia and suspect Russia of trying to punish the small Caucasus state for its bid to join NATO.
In an instruction released by Russia's foreign ministry, President Vladimir Putin ordered his government to recognise some documents issued by the separatist authorities and cooperate with them on trade and other issues.
"The main motivating factor for all our actions in this field is care for the interests of the people of Abkhazia and South Ossetia, including the Russian citizens living there," the foreign ministry said in a statement.
"Our actions ... do not mean that Russia is making a choice in favour of confrontation with Georgia," it said.
After Georgian President Mikhail Saakashvili chaired an emergency session of his security council, Foreign Minister David Bakradze said Russia's move amounted to a "legalisation of the de facto annexation process" being conducted by Russia.
"That is against all the norms of international law and the Georgian side will do whatever it can do in order to bring diplomatic, political and legal response to this policy," Bakradze, who was speaking in English, told Reuters.
Georgia has accused Moscow of creeping annexation of the rebel territories since they threw off Tbilisi's control in fighting in the 1990s.
State Department spokesman Sean McCormack reiterated U.S. backing for Georgia, saying its commitment to the country's territorial integrity was "unshakeable."
"I think they (the Russians) are trying to stir things up," a senior U.S. official said. "It's political mischief on their part."
NATO Secretary-General Jaap de Hoop Scheffer said he was deeply concerned and noted NATO allies had reiterated support for Georgia's territorial integrity at a summit this month.
"The Russian steps undermine that sovereignty," he said in a statement. "I urge the Russian Federation to reverse these measures, and call on the Georgian authorities to continue to show restraint."
European Union foreign policy chief Javier Solana discussed the move with Saakashvili, spokeswoman Cristina Gallach said.
"Mr Saakashvili called Mr Solana and expressed his concern about this development, in particular because of the unilateral nature of the decision by the Russians," she said.
Britain also expressed concern, saying in a Foreign Office statement it "would only increase tensions in the region".
Putin's order made no mention of recognising the two regions' claims for independence from Georgia. Diplomats say Moscow is unlikely to grant diplomatic recognition because it is wary of fomenting separatism inside its own borders.
Putin did though instruct his government to recognise businesses and organisations registered under Abkhaz and South Ossetian law, and to look at providing consular services to residents in the two regions.
Moscow already has close informal ties with Abkhazia and South Ossetia: it provides financial assistance and has issued most of the regions' residents with Russian passports.
Moscow announced the new links two weeks after NATO angered Russia by agreeing at a summit in Bucharest that Georgia would be allowed to join the alliance, though it did not give a timetable for membership.
The announcement by Moscow of closer ties could also stoke Western concern that Russia is using the breakaway regions to retaliate for the recent recognition of the independence of Kosovo in the Balkans, which the Kremlin fiercely opposed.
Abkhazia's separatist foreign minister, Sergei Shamba, said Putin's order was a step towards independence for his region, a stretch of land on the Black Sea coast.
"In effect, Abkhazia is in the final straight before the finishing line, beyond which lies the recognition of our independence," Interfax news agency quoted him as saying. (Reporting by Margarita Antidze in Tbilisi, Dmitry Solovyov in Moscow and David Brunnstrom in Brussels; Susan Cornwell in Washington; writing by Christian Lowe; editing by Philippa Fletcher)