Thousands of people have taken to the streets in Kiev, Ukraine's capital, to protest against the rising cost of living and pay cuts.

About 2,000 people, including teachers, doctors, small-business owners and union representatives demonstrated in the city on Thursday, as public discontent grows over the country's economic crisis.

Ukraine's economy has suffered severely from the global financial crisis, with industrial output falling 30 per cent, and its currency plummeting in value.

It has appealed to the International Monetary Fund for a $16.4bn loan, which is being given to the country in instalments.

Anger at mayor

Valery Chernyenko, head of the National Committee for Saving Business, said protesters were demanding a new government.

"Today the crisis that is developing all across Ukraine, is also destroying Kiev. Therefore, today we are demanding an immediate resolution that Ukraine needs a new government."

Protesters also demanded the resignation of Leonid Chernovetsky, the city's mayor, who has had his work investigated by a parliamentary commission, which also advised him to undergo mental health tests.

Chernovetsky's policies, aimed at covering city budget deficits, include scrapping free medical care in Kiev clinics, the closure of some schools and kindergartens, a reduction in heating temperature for homes and businesses, and a large rise in public transport costs.

His measures have been particularly unpopular with the city's middle classes.

Antonina Sotnichenko, a Kiev resident, said she felt "ashamed" of the capital.

"We have come here because we are ashamed of our Kiev, we want to leave. We are all seeing what Chernovetsky and his team are doing. Our children and grandchildren. We feel ashamed of our inability to protect Kiev from this government," she said.

Ivan Golodevsky, another protester, said he wanted the mayor to negotiate over key issues.

"The government is for the people, and not people for the government. This is not our first protest and our goal is the following; no talks, the mayor should be removed," he said.