In a politically-tinged verdict that is likely to badly damage the country’s relationship with the European Union and the United States, the presiding judge said Mrs Tymoshenko had “criminally” exceeded her powers in 2009 when she was the country’s prime minister.

More specifically, he said that she had illegally concluded a gas deal with Russia that had lost the Ukrainian treasury the equivalent of £118 million pounds and damaged Ukraine’s own gas industry.

"Tymoshenko... used her official powers to criminal ends and, acting consciously, committed actions which clearly exceeded her rights and powers which had heavy consequences," said the judge Rodion Kireyev.

Ordering her to pay back all the money to the state, he sentenced her to seven years in jail, the exact term that state prosecutors had asked for.

Dressed in a cream designer outfit, Mrs Tymoshenko kept calm but was visibly shaken by what she was hearing and made several interventions during the reading of the verdict to condemn the proceedings.

"There is not a word of truth in what Kireyev is saying,” she said during a break in the proceedings. “All of this will be rejected, I am certain. But not in the Ukrainian courts."

Flanked by her daughter and her husband, she said the case was dreamt up by Ukrainian President Viktor Yanukovych to remove her from the political arena.

"The criminal case was fabricated and the judgement was fabricated," she said.

The verdict means the 50-year-old heroine of the 2004 pro-Western Orange Revolution will now be unable to run in a parliamentary election next year and a presidential poll in 2015.

The ruling will cause fury in the EU and the United States where top politicians have agreed with Ms Tymoshenko’s own assessment of the trial as politically-motivated revenge.

Ukraine was close to signing an economic cooperation agreement with the EU but that now must be in doubt.

The main opposition leader in Ukraine, Mrs Tymoshenko has alleged that President Yanukovych has harshly clamped down on dissent and the media since coming to power last year.

In an interview with the Daily Telegraph before her trial got under way she said: “He thinks he lives in the former USSR behind the Iron Curtain and that he can do what he wants. He wants to liquidate the opposition and remove me as a rival by putting me in jail so that he can stay in power. It is the recipe that the KGB used.” -By Andrew Osborn, 11 Oct 2011