(Corrects Europe to Ukraine in lead)
* Separatist rebels continue stand-off in two cities
* Kiev says crisis is part of Kremlin plan for Ukraine break-up
* Conscript demobilisation delayed due to Russian troop reports
By Lina Kushch and Thomas Grove
DONETSK/LUHANSK, Ukraine, April 11 (Reuters) - Ukraine's prime minister offered on Friday to boost local powers in the regions in an effort to undercut pro-Russia separatists who have occupied official buildings in Russian-speaking cities in eastern Ukraine.
But separatists still occupied the main regional offices in Donetsk, while in Luhansk armed rebels were refusing an offer of non-prosecution by the Kiev authorities in exchange for them laying down their weapons and quitting the regional offices of the state security service.
The new pro-Europe leadership in Kiev says the separatists are acting out a plan drawn up by the Kremlin to dismember Ukraine and follows the scenario under which Russia annexed Crimea.
The protesters in Luhansk, who like Moscow are critical of the Euromaidan revolution that ousted the Kremlin-backed Viktor Yanukovich as president, have taken guns from an armoury inside the building and are pressing for a referendum on the future of the region.
The separatists in Donetsk appear to be still sticking to demands for some form of self-rule despite negotiations with local officials and Ukraine's richest man, multi-billionaire Rinat Akhmetov.
Touring Donetsk and the eastern city of Dnipropetrovsk, Prime Minister Arseny Yatseniuk said under a blueprint for a new constitution "a significant number" of powers would devolve away from the Kiev government to Ukraine's regions.
These would allowing regions to plough back a portion of state taxes into the local economy and infrastructure.
These 'de-centralisation' proposals appeared in part designed to meet separatists demands for self-rule, though they differ for calls by Russia for Ukraine to adopt a "federalised" model.
Kiev see federalisation, as proposed by Moscow, as part of a deeper Kremlin plan which would be manipulated by Russia in vulnerable Russian-speaking areas like Donetsk and Luhansk to bring about the break-up of Ukraine.
Yatseniuk made new appeals to separatists to lay down their arms. The authorities have already let one ultimatum pass without using force to end the separatists' occupations, but Yatseniuk suggested patience was not boundless.
"There is a limit for everybody. So everything to be done so that those who have seized buildings and are holding weapons, come out of the buildings before force is used. And today we have that ability," Yatseniuk said.
"We are leading active negotiations with these terrorists, separatists, as we call them and we hope to solve this issue by peaceful means," first deputy prime minister Vitaly Yarema, who was accompanying Yatseniuk, said.
In Luhansk, the separatists who seized the state security building and call themselves the Southeastern Army showed little signs of backing down from their demands.
"We demand that the central authorities pass a law within three days on a local referendum and formalise the status of united forces of the Southeastern army as a military unit," said Valery Bulatov, one of the leaders.
Alexei Koryakin, wearing a green paramilitary jacket and speaking from inside the occupied building, said the group was also eyeing the declaration of a Lugansk Republic - a move similar to that taken by Donetsk earlier in the week.
Russia's chief prosecutor meanwhile was quoted as saying that Moscow regarded Yanukovich, who has been living in Russia since fleeing Ukraine on Feb. 22, as the "fully fledged, legitimate president."
He was quoted as saying Moscow would not extradite Yanukovich to Ukraine where he faces charges of "mass murder" over the killings of more than 100 people in Kiev by police during the unrest.
Reflecting tension over reports of a Russian build-up of military force near the border, Ukraine's interim defence minister said it was suspending demobilisation of army conscripts.
"The soldiers will go home when the situation has normalised," the minister, Mykhailo Koval, said.
NATO on Thursday presented satellite photographs showing Russian deployments of 40,000 troops near the Ukrainian frontier along with tanks, armoured vehicles, artillery and aircraft ready for action.
Koval told journalists that Ukraine had a good idea of where Russian forces were located.
"The Russian group (of forces) has not lessened. They pulled back troops to 30 km (19 miles) from the border. The troops are on a training base," Koval said. (Additional reporting by Pavel Polityuk and natalia Zinets; Writing By Richard Balmforth)
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