Russia warns to retaliate by military means after a deal with the Czech Republic brought the US missile defense system in Europe a step closer.

The threat followed quickly on from the announcement that Condoleezza Rice signed a formal agreement with the Czech Republic to host the radar for the controversial project.

Moscow argues that the missile shield would severely undermine the balance of European security and regards the proposed missile shield based in two former Communist countries as a hostile move.

"We will be forced to react not with diplomatic, but with military-technical methods," the Russian Foreign Ministry said in a statement. "There is no doubt that the approachment of elements of the U.S. strategic arsenal to the Russian territory could be used to weaken the potential of our deterrent."

The ministry did not detail what its response might entail, The Times reports.

U.S. Secretary of State Condoleezza Rice signed a deal Tuesday with her Czech counterpart, Karel Schwarzenberg, to place radar units for the system inside the borders of the Czech Republic.

The United States is also seeking a deal with Warsaw to place interceptor missiles in Poland as part of the system.