David Cameron has denounced the presence of Russian troops on Ukrainian soil as "unjustified and unacceptable", as he accused Moscow of trying to force its smaller neighbour to "abandon its democratic choices at the barrel of a gun".
The Prime Minister's comments came as it was announced that Nato leaders are to be asked at this week's summit in Wales to approve the creation of a new high-readiness force and the stockpiling of military equipment and supplies in Eastern Europe to help protect member nations against potential aggression from Russia.
Mr Cameron urged Western nations to show "real resilience and resolve" in the face of Russia's "indefensible" actions in the east of Ukraine and warned Moscow that it faces a "radically different" relationship with the rest of the world if it continues on its current path.
"The presence of Russian soldiers on Ukrainian soil is completely unjustified and unacceptable," the Prime Minister said in a statement to the House of Commons.
"The real cause of this conflict is Russia's refusal to recognise Ukraine's independence and sovereignty. Decisions on Ukraine's political and economic relationships should be for the people of Ukraine and no-one else.
"Russia appears to be trying to force Ukraine to abandon its democratic choices at the barrel of a gun. In the last two weeks we've seen a dramatic stepping up of Russian military support to the separatists in eastern Ukraine, including Russian troops fighting on the ground.
"We know from European history the grave danger of a nation state being threatened and undermined in this way, so the European Council agreed that the economic costs it has already imposed on Russia must be stepped up if Moscow persists with these indefensible actions."
Nato secretary general Anders Fogh Rasmussen unveiled a new Readiness Action Plan, including proposals for a new force of several thousand troops to act as a "spearhead" to be deployed at very short notice to help member states defend themselves against any threat, including Russia.
Backed by air and naval assets, the unit would be made up of troops contributed on a rolling basis by the 28 Nato member states, including the UK.
A senior Nato official said that it was envisaged that the force could respond within two days of a threat, and elements of it could be in place by the end of this year.
"I cannot say you will see all of the elements in place by Christmas, but some parts of it will be," said the source.
Speaking in Brussels, Mr Rasmussen said: "The Readiness Action Plan will ensure that we have the right forces and the right equipment in the right place, at the right time.
"Not because Nato wants to attack anyone. But because the dangers and the threats are more present and more visible. And we will do what it takes to defend our allies."
Nato leaders including Mr Cameron and US President Barack Obama are expected to use this week's summit, which opens near Newport on Thursday, to discuss the military alliance's response to the crisis in Ukraine.
Russia's effective annexation of Crimea has been denounced by the EU and US, and sanctions have been stepped up in response to Moscow's failure to de-escalate the situation.
Fresh concerns were prompted at the weekend by Russian President Vladimir Putin's call for Ukraine to begin "substantive, meaningful talks" about the "political organisation of society and statehood" of the country's eastern region, where pro-Moscow separatists have been clashing with forces loyal to the Kiev government.
Responding to Mr Putin's comments, Mr Rasmussen said: "First and foremost, it is for the Ukrainians to decide what should be the future of their country.
"The Ukrainians should discuss this and the Ukrainians should take decisions without outside interference.
"Ukraine is a sovereign nation and it is for the Ukrainian people to decide the future of their country."
And Mr Cameron's official spokesman told a Westminster media briefing that Mr Putin's statement was "wholly at odds with what the Prime Minister and other EU leaders reiterated at the weekend in the European Council conclusions around the importance of respect for the sovereignty and territorial integrity of Ukraine".
The European Council summit in Brussels on Saturday paved the way for further EU sanctions on Russia, expected to be announced later this week.
Mr Cameron rejected suggestions that EU and US sanctions imposed on Russia since the annexation of Crimea in March were having little impact on Moscow.
"Capital has flown out of Russia, banks are short of finance and the Russian stock market and rouble have fallen significantly," said the Prime Minister.
"We have to show real resilience and resolve. Russia needs to understand that if it continues on its current path then its relationship with the rest of the world will be radically different in the future."
Labour leader Ed Miliband told the Commons that "continued Russian aggression must be met with a robust, co-ordinated and united international response which sends a clear signal to President Putin".
He called for the EU to consider further sectoral sanctions in areas including energy, defence and financial services.
Replying to Mr Miliband, Mr Cameron said European leaders were discussing the possibility of further sectoral sanctions.
The Prime Minister said: "You asked whether we were looking at further sectoral sanctions - yes we are, that is what the conclusions of the EU Council set out.
"I think what is important is that we also fill in some of the gaps that have been left so far - so for instance on financial sanctions we need to make sure that we press home on things like syndicated loans which others have opposed but we have been prepared to support."
Mr Cameron later told MPs it was important Russia saw British troops in nearby Nato countries.
He told the Commons: "I think it's very important that when Russia looks at countries like Estonia or Latvia or Poland they don't just see Estonian, Latvian and Polish soldiers, they see French, German, British soldiers too.
"We need to make real the Article 5 commitments that we have and that is very important. We've already taken steps to help, for instance, with Baltic air patrolling and that's very gratefully received by those countries concerned."
Mr Cameron was replying to a question from Conservative Rory Stewart, chairman of the Defence Select Committee, who had asked the PM: "When will you investigate committing towards pre-positioning equipment towards the Baltic, ensuring there is a British battalion under the command of the supreme allied commander Europe to be deployed in rapid reaction, and to ensure that we make a binding, statutory, long-term commitment to 2% of GDP on defence?"
Mr Cameron said many of Mr Stewart's suggestions will be "directly addressed" at the Nato conference.
Labour's Nia Griffith (Llanelli) asked the prime minister for more detail on what additional sanctions he had pushed for in his discussions with European leaders.
He said he had asked for what are known as tier three sanctions, namely real economic sanctions in the areas of finance, energy and defence.
He went on: "We have tasked the European Commission within a week to come up with a set of new proposals. Specifically what I pushed for was to make sure we start filling in some of the gaps that have been left in previous financial, energy and defence sanctions.
"So further measures, which will affect Britain - but we should prepared to take that pain - further measures on that level would be good."
Conservative Rob Wilson (Reading East) said he welcomed the ramping up of sanctions by the EU and described the situation in Ukraine as "naked Russian aggression".
He suggested it was time for the West led by Nato and the US to honour its obligation to Ukraine and "face this threat down".
Mr Cameron said he agreed what was happening was "relatively clear", adding: "You have Russian troops with Russian equipment on Ukrainian soil. The evidence for that now is overwhelming.
"I think our response should be very clear about how unacceptable that is and we should be making use of the great strength we have which is that Russia needs America and Europe more than America and Europe needs Russia.
"We need to make that relationship pay and play ... so that they change their approach. But it will not be an easy step to take.
"I don't think it would be right to try and find some military response to this ... But if we make the influence of our power felt then Russia will see the consequences."