The surprise government order came just hours after Ukraine's parliament failed to pass a law that was a key condition for a deal.
The moves appeared to be a sharp step away from the EU pact, which Brussels had hoped to sign next week, after days of increasing brinkmanship by Kiev amid pressure from the EU and Russia.
"It's looking bleak but it's not over yet," said one senior EU aide.
Stefan Fule, the EU's enlargement commissioner and Brussels' point man on Ukraine, however, canceled a trip to Kiev late Thursday that he'd announced only hours before.
Ukrainian President Viktor Yanukovych, on a visit to Vienna, seemed to leave the door open to an EU deal, saying, "an alternative to European integration does not exist."
But he didn't refer to the agreement specifically.
EU officials were deeply disappointed, but said the bloc would continue to push for links with Ukraine — assuming Kiev was willing to do what it takes to align with Europe.
"Our interest in good relations with Ukraine is unbroken and our offer for partnership stands," said German Foreign Minister Guido Westerwelle.
"But that presupposes that there's a will in Kiev to go down a European path of development."
He added, "The ball is in Ukraine's court. It is its sovereign right to decide freely on its own path."
Mr. Yanukovych had signaled to EU officials earlier in the week that Kiev might not be ready to sign the deal as planned at next week's EU summit in Vilnius.
But western officials said that appeared to be a bluff aimed at extracting more financial aid from the West for his sputtering economy.
Earlier this month, Kiev had appeared to turn away from Moscow, announcing it had suspended gas imports from Russia, only to reverse the decision shortly afterward.
Russia has threatened dire economic consequences if Kiev signs the EU deal and has pushed it to join a rival trade bloc led by Moscow.
The conflict has intensified as next week's summit in Lithuania draws closer, becoming a battle for influence some analysts say is reminiscent of the Cold War.
Both the EU and Russia have rejected charges they're pressuring Ukraine, however.
In an order Thursday, the Ukrainian government called for restarting talks with the Moscow-led bloc in an effort to revive trade flows which have declined as Russia has imposed restrictions in recent months.
The order called for a joint commission on trade between Ukraine, Russia and the EU.
"Ukraine government suddenly bows deeply to the Kremlin," Swedish Foreign Minister Carl Bildt wrote in Twitter after the order was published.
"Politics of brutal pressure evidently works."
EU leaders have warned that Ukraine risks losing the chance for the association agreement if it isn't signed at next week's summit.
Diplomats have been scrambling to come up with a package of economic assistance to help Kiev weather the impact of expected trade retaliation from Moscow, which is loath to see a territory that has been part of Russia for centuries turn away from it.
The EU has called for Ukraine to enact a series of legal reforms, but Brussels' main requirement is the release from prison of opposition leader Yulia Tymoshenko, whose jailing has come to symbolize selective prosecution in Ukraine, although Mr. Yanukovych's government denies any political motivation in the case.
One of the draft laws under consideration Thursday would have allowed the release of prisoners for medical treatment; Ms. Tymoshenko is suffering from a back ailment and is seeking to be treated in Germany.
Ms. Tymoshenko was a leader of the Orange Revolution, which thwarted Mr. Yanukovych's first run at the presidency in 2004.
He narrowly defeated her in a presidential runoff in 2010 and then dismissed her as prime minister.
She was sentenced to seven years in jail in 2011.
Top EU diplomats were back in Kiev for the session of the Rada, or parliament Thursday, but legislators from the Regions Party voted against six different versions of the law on releasing prisoners.
A law on electoral reforms sought by the EU did win approval, while another on changes to the prosecution system was still on the agenda for Friday.
Ukrainian backers of the EU deal blasted the ruling party for blocking the other laws.
"You're endangering the future of the Ukrainian state and are worried only about your personal pockets," Oleh Tiahnybok, a member of the Svoboda opposition bloc, said in parliament, denouncing the Party of the Regions and Communist legislators who voted against the plan Thursday.
International Monetary Fund officials were in Kiev for talks this week on reviving a loan program, but government officials continued to complain that the fund was demanding too many painful steps as a condition for new lending.
The EU has already moved to help Ukraine secure future gas supplies from the bloc and had €610 million ($822 million) available for Ukraine if it signs an IMF loan deal.
The EU is also currently committed to giving Ukraine annual assistance of some €300 million ($404 million) under its neighborhood programs, an amount that could be increased if the country takes further steps toward democracy and the rule of law.
Source: The Wall Street Journal