NATO has demanded that Moscow withdraw its troops from Ukraine as President Obama and his Western allies held a summit intended to strengthen defences against Russia in the biggest strategic shift since the Cold War.
As Western leaders discussed sanctions against Russia over continued fighting in eastern Ukraine, the Kremlin dangled the prospect of an imminent ceasefire in the five-month-old armed revolt by pro-Russian separatists.
"We call on Russia to end its illegal and self-declared annexation of Crimea," Secretary-General Anders Fogh Rasmussen declared as the 28 NATO leaders met Ukrainian President Petro Poroshenko at a golf resort near the Welsh city of Newport.
"We call on Russia to pull back its troops from Ukraine and stop the flow of arms, fighters and funds to the separatists,"Rasmussen said. "We call on Russia to step back from confrontation and take the path of peace."
His statement set the tone for a two-day meeting marked by the most serious east-west standoff since the fall of the Berlin Wall 25 years ago and the collapse of the Soviet bloc, as well as alarm at territorial gains by Islamist insurgents in Iraq and Syria.
Mr Poroshenko, whose forces have suffered a string of setbacks in the last week, told reporters he would order a ceasefire today if an agreement on a peace plan to end the war in eastern Ukraine is signed at talks in Minsk.
"The only thing we need now for peace and stability is just two main things: first, that Russia withdraw their troops, and second, to close the border," he said.
A NATO military officer said Moscow had "several thousand" combat troops and hundreds of tanks and armoured vehicles operating in Ukraine. The NATO leaders also discussed how to tackle Islamic State militants who have captured swathes of Iraq and Syria, in a new threat on the alliance's south eastern flank, and how to stabilise Afghanistan when NATO forces leave at the end of the year.
In Moscow Russia warned Kiev over increased co-operation with NATO as it launched another round of military exercises in the south of the country involving fighter jets, naval forces and missile systems.
Foreign Minister Sergei Lavrov said that moves to include Ukraine in NATO would "derail" any peace negotiations between Kiev and separatist fighters in the east of the country.
"Some of our Western partners including, unfortunately, the most influential player - the United States - want NATO to be victorious and want to see a situation win out where America dictates to everyone," Mr Lavrov said.
Yesterday Russia began military exercises to the north of the Caspian Sea around the cities of Volgograd and Astrakhan, about 300 miles from the country's border with Ukraine.
The drills, which are due to last until the end of the week, will see the deployment of the latest rocket systems, including the Buk missile systems that are suspected of having brought down Malaysian Airways Flight MH17 over Ukraine in July.
Units from Russia's Caspian Fleet and aircraft and helicopters will also take part. Nor was there any sign of fighting in eastern Ukraine to be letting up, despite an apparent agreement between Mr Poroshenko and President Vladimir Putin.
Separatist fighters were using mortars and howitzers against Ukrainian troops defending Donetsk airport, Russian news agency RIA Novosti reported, citing one of their journalists on the ground.
The airport has been the scene of heavy fighting in recent weeks, with reports that Ukrainian forces have been encircled by the Russian-backed rebels. (© Daily Telegraph, London)