PM and Obama unite in condemnation
The European Union and United States "should stand united in their condemnation of Russia's actions" in Ukraine, David Cameron and Barack Obama agreed as the West sought to increase pressure on Moscow.
In a phone call the Prime Minister and US president agreed the current situation was "unacceptable" because the Russian authorities had yet to withdraw their troops to their bases and refused to recognise the interim government in Kiev.
Downing Street said the two leaders had agreed that the EU and US should make clear to president Vladimir Putin that there would be "significant consequences" for Russia's actions.
Mr Cameron will meet fellow European leaders tomorrow in Brussels to discuss the crisis in Ukraine following an intense day of diplomatic activity involving the Western powers and Russia.
It was announced British observers will form part of an international team of unarmed military monitors from the Organisation for Security and Co-operation in Europe (OSCE) being sent to Ukraine at the request of the Kiev government and Nato has put its relationship with Russia under review.
A Downing Street spokesman said: "Ahead of tomorrow's European Council, the Prime Minister spoke to president Obama earlier today to discuss the situation in Ukraine.
"They reiterated their grave concern over Russia's clear violation of Ukrainian sovereignty and territorial integrity and agreed that the international community should continue to work together to de-escalate the situation and to deter any further Russian action.
"While they noted that there had not been any further serious escalations by the Russians in the last 48 hours, both agreed that the current circumstances are unacceptable - the Russian authorities had yet to withdraw their troops back to bases, still refused to recognise the interim Government in Kiev and the situation on the ground remained extremely tense.
"They both welcomed the observer mission being undertaken by Organisation for Security and Co-operation in Europe at the request of the government of Ukraine.
"They agreed that the EU and United States should stand united in their condemnation of Russia's actions and make clear to president Putin that such actions would face significant consequences.
"They also discussed how to encourage direct talks between Ukraine and Russia and the need to continue to support the government of Ukraine as it works to stabilise its economy and to restore stability for the Ukrainian people."
US secretary of state John Kerry told Russian counterpart Sergey Lavrov that Moscow had made the "wrong choice" but could now take steps to de-escalate the situation.
Following talks in Paris Mr Kerry said: "We renew our call for Russia to speak directly to the government of Ukraine, to send troops back to bases and to welcome international observers and human rights monitors."
In a hint that there could be progress he said the meeting was "very constructive, without promising something that is not defined yet, without raising hopes that are inappropriate to raise" and added " I'd rather be where we are today than where we were yesterday".
UN special envoy Robert Serry was forced to cut short his mission in Crimea after being threatened by a gang of armed men and ordered to leave the region and Mr Kerry said the incident illustrated "just how important it is to ensure the safety of those monitors and those observers".
At Prime Minister's Questions Mr Cameron gave his strongest indication yet that the G8 meeting in Russia will be abandoned because of the crisis.
The Prime Minister said it was "hard to see" how the gathering of the powerful group of nations could go ahead in Sochi in June, and insisted "nothing should be off the table" in terms of sanctions.
He said it was important that the European Council meeting tomorrow showed "unity of purpose and a clear voice".
Speaking in Madrid en route to Paris, Sergey Lavrov repeated president Putin's denial that the soldiers operating in uniforms without insignia were Russian troops, or under Moscow's control.
Troops of the Black Sea fleet had stepped up security around Russian military facilities in Crimea but had not deployed outside their bases, he said.
Mr Lavrov said he would tell his Western counterparts that the "unbreachable foundation" for a resolution to the crisis should be the implementation of the February 21 agreement reached between ousted president Viktor Yanukovych and protesters and signed by France, Germany and Poland in the presence of a Russian mediator, which provided for a return to Ukraine's old constitution and presidential elections by the end of the year.
Within hours of the deal, Mr Yanukovych had left Kiev and his regime crumbled as protesters stormed government buildings.
"The way out is possible on the basis of the agreement of February 21," said Mr Lavrov. "What has been agreed should be implemented."
The OSCE announced it is sending a 35-strong delegation of monitors to the Ukraine, following a meeting of the body's permanent council and forum for security co-operation at a meeting in Vienna yesterday.
The group of unarmed military personnel drawn from 18 countries, including the UK, will use a week-long visit to "dispel concerns about unusual military activities".
Nato secretary general Anders Fogh Rasmussen said the alliance's co-operation with Russia was "under review" and planning for a joint operation had been suspended.
Russian warships had been due to escort a US cargo ship carrying Syrian chemical weapons destined for destruction.
"Let me stress this will not affect the destruction of chemical weapons but Russia will not be involved in the escort of the US vessel," he said .
"We have also decided that no staff level civilian or military meetings with Russia will take place for now.
"We have put the entire range of Nato-Russia co-operation under review.
Nato foreign ministers will take decisions on this in early April."
Meanwhile the European Union proposed an aid package for Ukraine worth up to 11 billion euros (£9 billion) to help "stabilise its economic and financial situation" and agreed an asset freeze on 18 people suspected of "misappropriating" state funds.
Names of those being hit by the sanction will not be released until the freeze comes into force, but a similar move by Switzerland last month targeted Mr Yanukovych and people close to him.
Foreign Secretary William Hague, who also took part in the Paris talks, said there was "willingness to try to find a common framework" that could lead to face-to-face discussions between the Russians and Ukrainians.
He said: " The issues are very difficult. Russian and Ukraine both have things that they have taken away to study further and think about, so there is some willingness to do that but we are certainly not there yet with such a framework. There will have to be further discussions."
But he added: " I don't think anybody has softened in their position which is why these meetings are very difficult. And in the case of Russia, clearly further consultations and further discussion and further proposals are required within their government.
"So I do not want to raise any expectations, it's very difficult work. These meetings are very difficult indeed but it is worth persisting with them.
"What is at stake is so enormous that it is very important for us to continue our diplomatic efforts. So in different places, through different channels, sometimes face-to-face, sometimes by telephone, this will be continued over the coming days."