Germany on Wednesday raised the alarm level under its emergency gas plan as fears rose that Russia could cut off supplies if Western countries refused to make payments in rubles.

"A crisis room will now be established in the ministry," Economy Minister Robert Habeck said in a press conference, after G7 countries rejected Russia's demand for payments in rubles.

The "early warning" measure, the first of three alarm levels under the government's emergency gas plan, was "preventative" and intended to assure supply of the fuel, Habeck said.

Gas reserves were currently at 25 percent of capacity, the minister said, adding that a stop to deliveries from Russia would have "serious" consequences, though supplies continued to flow.

The Kremlin reiterated on Tuesday that it will only be accepting payment in rubles for gas deliveries to the European Union -- after G7 ministers called this arrangement "unacceptable".

"We are not going to accept a breach of the private contracts" for gas deliveries, Habeck said in his press conference. 

Germany is highly dependent on Russian gas for its energy needs, with 55 of its supplies being delivered along pipelines from the country before the invasion of Ukraine.

Since the outbreak of the war, Germany has accelerated plans to wean itself off Russian gas and diversify its supplies.