UK could expel four Russian diplomats over Moscow's refusal to hand over former KGB officer Andrei Lugovoi, the main suspect in the investigation into the death of Alexander Litvinenko, BBC reported on Monday.
The names of the diplomats were not made public, although they are believed to be intelligence officers.
Britain is also reviewing cooperation with Russia on a range of issues, Foreign Secretary David Miliband was quoted as saying.
Litvinenko was poisoned with highly radioactive isotope polonium 210, with British investigators accusing Lugovoi of carrying out the plot.
British authorities want Lugovoi to be tried in the UK, which Russia has refused. Lugovoi himself claims he is the victim of a frame-up.
Litvinenko, a former high-ranking officer in the KGB, defected in 2000 and was granted asylum in Britain after falling out with Putin, then freshly elected president of Russia.
He became one of Putin's most outspoken critics, denouncing the war with Chechnya and accusing Russian secret services of training terrorists, as well as carrying out terrorist acts within Russia.