Yushchenko had fired the prosecutor-general on Thursday.
Also present at the talks were Yulia Tymoshenko, leader of Ukraine's main opposition party, Ivan Plyushch, head of Ukraine's security council, and Oleksandr Moroz, the speaker of parliament.
The presidential decree concerns 32,000 troops largely responsible for maintaining public order and not the army, which is controlled by one of Yushchenko's few allies in the cabinet.
He ordered the interior ministry troops to protect key sites.
|The two Viktors: No smiles |
for the camera [AFP]
Yanukovich said the president’s move was dangerous and unconstitutional.
"Taking such decisions without consulting the government is inadmissible. I think this seriously aggravates the situation," he told an extraordinary cabinet meeting.
"What does all this mean? This means that the 'use of force scenario', which we have been discussing constantly, has begun."
Yushchenko responded by saying he held "little optimism" any new talks with Yanukovich and his ruling parliamentary coalition would help resolve the situation.
"Of course, we will continue the negotiating process in the coming days, but I would say I have little optimism that this can produce results," Yushchenko's press service quoted him as saying at a meeting with security officials.
The two Viktors are long standing political rivals dating back to the country’s "Orange Revolution" in 2005 when mass protests led to a re-run of a presidential vote originally won by Yanukovich but annulled because of fraud allegations.
Yushchenko won the re-run but in last year's parliamentary elections, Yanukovich's party won the largest share of seats.
The president is seen as more western looking in his political approach while the prime minister has been more closely allied to Moscow.
The Russian prime minister expressed his concern at the worsening political turmoil in neighbouring Ukraine on Friday.
Mikhail Fradkov was quoted by the Interfax news agency as saying Moscow was following events in Ukraine with a degree of concern.
Benita Ferrero-Waldner, the EU's external relations commissioner also urged both sides "to refrain from any action which would further exacerbate the situation, especially by involving the security forces."
A statement on the presidential website said Yushchenko's order for the troops to come under his command was necessary "to prevent using interior ministry troops in the interest of some political forces that cause a threat for Ukraine's national security".
But Konstantin Stogniy, a spokesman for the ministry, said Yushchenko's order was illegal, and "fulfilling illegal orders is a crime".
The troops are led by Oleksandr Kihtenko, who is seen as a Yushchenko ally.
The Interfax news agency cited Yushchenko aide Viktor Bondar as saying that the command had confirmed its readiness to follow Yushchenko's order, but the information could not immediately be confirmed.