The advanced version of the Russian missile has a range of 500 kilometres and could potentially be used to take out ground-based radar and interceptors of the new NATO shield.
Moscow's announcement prompted concern from the United States as well as neighbouring Poland and three Baltic states -- Estonia, Lithuania and Latvia.
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Poland's foreign ministry called the planned missile movement "disturbing".
"This is a matter for NATO and we can expect possible consultations and action... At the NATO and EU level," the ministry added in a statement.
Latvia's Defence Minister Artis Pabriks said that "several Baltic cities" were threatened by the move.
"It is clear that it is alarming news as it is one of the arguments changing balance of powers in our region," he said, according to the Baltic News Service (BNS).
Germany's Bild newspaper first reported over the weekend that Russia had deployed about 10 Iskander systems in its Kaliningrad exclave -- wedged between Poland and Lithuania -- at some point in the past year.
A top Russian defence official said in response to the report that several Iskander batteries had been stationed in Russia's Western Military District -- a region that includes the exclave and also borders the three Baltic nations that were once a part of the USSR.
"Iskander operational-tactical missile systems have indeed been commissioned by the Western Military District's missile and artillery forces," Russian news agencies quoted defence ministry spokesman Igor Konashenkov as saying.
He added that Russia's deployment "does not violate any international treaties or agreements" and should therefore not be subject to protests from the West.
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