The culture ministry on Monday sent a letter to the head of the Ukrainian Greek Catholic Church, Major Archbishop Sviatoslav Shevchuk, accusing its priests of "breaking the law" by holding religious services outside a place of worship.
The Church's priests, along with those of the Orthodox Church loyal to the Kiev Patriarchate, hold open-air religious services several times a day on Kiev's Independence Square, known locally as the Maidan.
"The breach of this law could lead to legal proceedings to put an end to the activities" of the Church, said a scanned version of the letter published by the opposition news website Ukrainska Pravda.
The square has been occupied since late November by protesters who are challenging President Viktor Yanukovych's U-turn on a landmark pact with the European Union in favour of closer ties with Russia.
Two tents erected on the square are used as places of worship, where protesters pray, go for confession and even have their children christened.
"For the first time since the independence of Ukraine, we have been put on our guard. We have de facto been warned that they could deprive our Church of its legal status," Shevchuk told reporters on Monday.
"We thought that the prosecution of priests was a thing of the past."
The government warning has sparked anger among believers.
"It is illegal, it is immoral. Nobody can forbid people to pray. Only Satan does not want people to pray," said Pavlo, 52, as he came out of one of the tents on Tuesday.
Yanukovych, who is accused by the opposition of being the initiator of the letter, said in comments released by his aides that the current "law should be amended to allow believers to pray wherever they like."
The Ukrainian Greek Catholic Church, also known as the Uniate Church, follows Orthodox traditions but is loyal to the Vatican.
It was banned in the Soviet era but has become the third largest confession in Ukraine since the country's independence in 1991.
The Church now has around 5.5 million followers in Ukraine, around 12 percent of its population of 46 million, most of them living in the western regions.
There are also around 1.5 believers in Ukrainian diasporas in Europe, the United States and Australia.
Source: Agence France-Presse