* Yanukovich increasingly isolated as protests worsen
* Not clear how long he will be away
* Russia says no more bailout aid until cabinet formed
* Protesters reject amnesty offer
By Richard Balmforth and Pavel Polityuk
KIEV, Jan 30 (Reuters) - Ukrainian President Viktor Yanukovich went on sick leave on Thursday after a bruising session of parliament, leaving a political vacuum in a country threatened with bankruptcy and destabilised by anti-government protests.
The 63-year-old president has appeared increasingly isolated in a crisis born of a tug-of-war between the West and Ukraine's former Soviet overlord Russia. A former president said this week the violence had brought Ukraine to the brink of civil war.
Shortly after his office announced he had developed a high temperature and acute respiratory ailment, Yanukovich defended his record in handling the crisis and accused the opposition, which is demanding his resignation, of provoking the unrest.
"We have fulfilled all the obligations which the authorities took on themselves," he said, referring to a bill passed late on Wednesday granting a conditional amnesty for activists who had been detained.
"However, the opposition continues to whip up the situation, calling on people to stand in the cold for the sake of the political ambitions of a few leaders. I think this is wrong," the presidential statement said.
The amnesty offered freedom from prosecution to peaceful protesters, but only on condition that activists left official buildings they have occupied - something they have rejected.
Prime Minister Mykola Azarov resigned on Tuesday after a sharp escalation of the street unrest, which began in November over Yanukovich's rejection of a European Union deal in favour of closer ties and a bailout deal with Russia.
The president, under pressure from Moscow not to tilt policy back towards the West, has yet to appoint a successor. Serhiy Arbuzov, Azarov's first deputy and a close family friend of Yanukovich, has stepped in as interim prime minister.
"The president of Ukraine has been officially registered as sick, with an acute respiratory ailment and a high temperature," a statement on the presidential website said.
BREATHING SPACE?
The bare announcement gave no indication of when he might be back at his desk or able to appoint a new government, which Moscow says must be in place before it goes ahead with a planned purchase of $2 billion of Ukrainian government bonds.
"Today is the first day of the illness. He has a high temperature. We are not doctors, but it is clear that a high temperature does not go down in a single day," a presidential spokesman said by telephone. "The doctors will do all they can so that he can recover quickly."
Some opposition figures said they suspected Yanukovich might be giving himself a breathing space after being forced into concessions to try to calm the unrest on the streets.
"This smacks of a 'diplomatic illness'," Rostislav Pavlenko, a member of boxer-turned-politician Vitaly Klitschko's Udar (Punch) party, told Reuters. "It allows Yanukovich not to sign laws, not to meet the opposition, absent himself from decisions to solve the political crisis."
A close ally of Yanukovich, who was last seen in parliament on Wednesday night, rejected that interpretation.
The president had hurried to the legislature to herd supporters into voting for the amnesty bill.
Mykhailo Chechetov, from Yanukovich's Party of Regions, said the president had told supporters in parliament that he had come to the session directly from hospital. "He looked ill," Chechetov said.
Photographs released by the presidential press service of Yanukovich holding talks with a European Union delegation earlier in the day revealed no obvious signs of illness.
URGENT TASKS
A video clip showed Yanukovich walking up a staircase in parliament surrounded by bodyguards and wearing an open neck shirt. The amnesty bill eventually passed late on Wednesday but few protesters are likely to leave occupied buildings outright.
"We will clear this building only if we get the resignation of Yanukovich, which is the main aim of our revolution, and the approval of the people on the 'Maidan' (Kiev's Independence Square), said 30-year-old Ruslan Andriyko, one of the hundreds occupying Kiev's City Hall.
The president has not had a history of ill health. He has full control over the government and still has solid backing in parliament but there are signs of discontent in his Party of Regions over the continuing crisis on the streets.
He replaced his long-standing head of administration in mid-January and has since sacked his press secretary.
Former Polish President Aleksander Kwasniewski, who has met Yanukovich many times, said he believed Yanukovich's hasty visit to parliament on Wednesday was a sign he was afraid of losing support.
"I think this urgent visit by the President to parliament shows he is afraid that the majority is no longer on his side," Kwasniewski said on Polish radio.
Ukraine's richest entrepreneurs, whose support Yanukovich has had and needs now, are now taking a more neutral line.
Chemical and gas billionaire Dmitry Firtash called on all sides in the conflict to find a compromise by negotiations that would yield "real" results, according to a statement from him on Thursday. Ukraine's richest man, steel magnate Rinat Akhmetov, made a similar appeal earlier this week.
Yanukovich's most urgent task now is to appoint a successor to Azarov, who served him loyally for four years, while the opposition is anxious that he also signs into force a repeal of anti-protest legislation.
Ukraine badly needs a new government. Russian President Vladimir Putin said on Wednesday Moscow would wait until one was formed before fully implementing the $15 billion bailout deal.
The cost of insuring Ukraine's debt against default rose to a new one month high on Thursday, and Ukraine's central bank intervened for a fourth successive day, offering dollars on the inter-bank market to prevent a serious slide in the national currency, the hryvnia, from its peg at around 8 to the dollar.
The statistics agency said the economy, dominated by steel exports, had ground to a halt in 2013. Analysts expect it to fall this year.
Six people have been killed and hundreds injured in street battles between anti-government demonstrators and police which escalated sharply after the authorities toughened their response. A seventh person, a police officer, died of a heart attack on the street on Wednesday night.
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