Breaking news. EU countries greenlight €35 billion loan for Ukraine using Russia's frozen assets

European Union countries have given their green light to an unprecedented plan to issue a €35 billion loan to support Ukraine's war-battered economy using the immobilised assets of Russia's Central Bank as collateral.

The deal is part of a broader initiative by G7 allies to provide €45 billion ($50 billion) to Kyiv as soon as possible. The country is struggling to contain a renewed Russian offensive that has badly damaged its power system and depleted its military stocks.

The €35 billion will be "undesignated" and "untargeted," according to EU officials, meaning the Ukrainian government will have maximum flexibility to spend the money.

The agreement, reached on Wednesday by ambassadors in Brussels, comes a day after Hungary confirmed it would block a key change in the EU sanctions regime until after the United States elects its next president on 5 November.

The proposed amendment will see member states renewing the restrictions on the frozen assets, worth about €210 billion across the bloc, every 36 months rather than every six months, as the current practice dictates.

"We believe that this issue should be decided – the prolongation of the Russian sanctions – after the US elections. That was the Hungarian position," Mihály Varga, Hungary's finance minister, said on Tuesday after a ministerial meeting in Luxembourg.

The longer renewal period is meant to make the ground-breaking project more predictable and reassure the misgivings expressed by G7 allies. The US, in particular, worries that one single EU country could, at any given time, block the renewal of sanctions, unfreeze the assets and throw the entire project into disarray.

The fears mostly relate to Hungary, the most Russian-friendly member state, which has acquired a