LONDON, Jan 23 (Reuters) - Russia will face severe economic sanctions if it installs a puppet regime in Ukraine, a senior British minister said on Sunday (Jan 23) after the UK accused the Kremlin of seeking to install a pro-Russian leader there.

"There'll be very serious consequences if Russia takes this move to try and invade but also install a puppet regime," British Deputy Prime Minister Dominic Raab told Sky News.

Britain made the accusation late on Saturday, also saying Russian intelligence officers had been in contact with a number of former Ukrainian politicians as part of plans for an invasion.

The Russian Foreign Ministry dismissed the British allegation as "disinformation," accusing NATO of "escalating tensions" over Ukraine.

The British claims came after the top US and Russian diplomats failed on Friday to make a major breakthrough in talks to resolve the crisis over Ukraine, which was sparked when Russia began massing troops near its border with the country.

Officials in Moscow have insisted they have no plans to invade, and both they and their American counterparts have agreed to keep talking. But tension remains high.

In Washington, the US State Department announced it was ordering the departure of eligible family members from its Embassy in Kyiv due to the threat of Russian military action.

US President Joe Biden has begun considering options for boosting America's military assets in the region, senior administration officials said, after meeting top national security aides at his Camp David retreat on Saturday.

The New York Times said Biden was mulling plans to send 1,000 to 5,000 troops to Eastern European countries, with the possibility of increasing the number should tensions flare further.

A senior administration official declined to confirm the numbers on Sunday but said "we are developing plans and we are consulting with allies to determine options moving forward".

With the world watching Moscow's next move closely, the British foreign ministry said it had information the Russian government was considering former Ukrainian lawmaker Yevhen Murayev as a potential candidate to head a pro-Russian leadership.

Murayev himself poured cold water on the notion that Russia wants to install him as Ukraine's leader, in comments to British newspapers and in an interview with Reuters.

"This morning I already read in all the news publications this conspiracy theory: Absolutely unproven, absolutely unfounded," Murayev told Reuters in a video call, adding he was considering legal action.

He denied having any contact with Russian intelligence officers and dismissed the idea that he could be in league with the Kremlin as "stupid", given he was placed under Russian sanctions in 2018.

Although he says he wants Ukraine to be independent from Russia as well as the West, Murayev, 45, has promoted some views that align with the Kremlin's narratives on Ukraine.

The British foreign ministry declined to provide evidence to back its accusations. In a message to Reuters, Mykhailo Podolyak, a Ukrainian adviser to the presidential office, said there was doubt among Ukrainians as to whether Murayev was "too ridiculous a figure" to be the Kremlin's pick to lead Ukraine.

But he added that Russia had propped up previously minor figures in leadership positions in annexed Crimea and separatist-held Donbass.

Therefore "one should take this information as seriously as possible", he said.