David Cameron is to push for harsher sanctions against Russia after Moscow was accused of deploying more than 1,000 troops and an arsenal of weapons into Ukraine.
The Prime Minister will urge fellow European leaders to ratchet up the pressure when they meet for a summit in Brussels tomorrow.
The gathering comes after Nato released images apparently showing the extent of Russian forces on the ground in the east of the country.
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UK Government sources said they believed the separatists now had an array of heavy weaponry supplied by President Vladimir Putin, including 100 battle tanks, 100 artillery pieces, anti-tank weapons and shoulder-mounted missile launchers.
At a press conference overnight, US President Barack Obama said the satellite pictures made it "plain for the world to see" that Moscow had "deliberately and repeatedly violated the sovereignty and territorial integrity of Ukraine".
"The violence is encouraged by Russia. The separatists are trained by Russia, they are armed by Russia, they are funded by Russia," he said.
The Russian tanks filmed rumbling through Ukraine were merely "a continuation of what's been taking place for months now", he added.
Nato Secretary-General Anders Fogh Rasmussen appeared to signal a tougher line by insisting that the alliance would "fully respect" any membership bid by Kiev.
Ukrainian Prime Minister Arseny Yatseniuk has said he will ask parliament to abandon the country's non-aligned status and seek to join - a move that Russia has previously dismissed as unacceptable.
Mr Rasmussen told a press conference: "Despite Moscow's hollow denials, it is now clear that Russian troops and equipment have illegally crossed the border into eastern and south-eastern Ukraine.
"Russian forces are engaged in direct military operations inside Ukraine."
Meanwhile, Mr Putin issued a statement calling on pro-Russian separatists to avoid "senseless deaths" by releasing Ukrainian soldiers who have been surrounded. He is thought to have been referring to fighting outside the strategic town of Ilovaysk, east of Donetsk.
"I'm calling on insurgents to open a humanitarian corridor for Ukrainian troops who were surrounded in order to avoid senseless deaths," Mr Putin said.
However, he did not address the claims about Russia's military presence in Ukraine.
The escalating crisis is set to be discussed by EU leaders in Brussels tomorrow evening. Mr Cameron is expected to urge counterparts to demonstrate political will to ratchet up the sanctions regime, although details of measures are unlikely to be finalised.
He will also call for closer alignment between EU sanctions and those imposed by the US and Canada - raising the prospect of measures against specific Russian firms in sectors such as banking and energy.