Pressure is mounting on Russia after it was accused of sending tanks, artillery and troops into Ukraine and Western powers said Moscow “outright lied” about its role and dangerously escalated the conflict.
But Moscow dismissed the claims, describing the fighters as “Russian volunteers”.
The Kremlin has repeatedly denied arming and supporting the separatists who have been fighting Ukrainian troops for four months in the gravest crisis between Russia and the West since the end of the Cold War.
Nato said at least 1,000 Russian troops were in Ukraine and later released what it said were satellite photos of Russian self-propelled artillery units moving last week.
Two columns of tanks and other equipment entered south-eastern Ukraine at mid-day, following heavy shelling of the area from Russia that forced overmatched Ukrainian border guards to flee, said Col Andriy Lysenko, a spokesman for Ukraine’s national security council.
“Russian forces have entered Ukraine,” President Petro Poroshenko said in Kiev.
He urged Ukrainians to remain calm, telling his country’s national security council: “Destabilisation of the situation and panic, this is as much of a weapon of the enemy as tanks.”
US president Barack Obama spoke to German chancellor Angela Merkel and both leaders agreed Russia must face consequences for its actions.
“We agree – if there was ever any doubt – that Russia is responsible for the violence in eastern Ukraine,” Mr Obama said. “The violence is encouraged by Russia. The separatists are trained by Russia, they are armed by Russia, they are funded by Russia.”
He added that Russia “has deliberately and repeatedly violated the sovereignty and territorial integrity of Ukraine, and the new images of Russian forces inside Ukraine make that plain for the world to see.”
But Mr Obama ruled out a military confrontation between the US and Russia. He said Russia’s activity in Ukraine would incur “more costs and consequences”, though these seemed to be limited to economic pressure that will be discussed when Mr Obama meets European leaders at a Nato summit in Wales next week.
At an emergency session of the United Nations Security Council, Western representatives expressed outrage.
“Now we see irrefutable evidence of regular Russian forces operating inside Ukraine,” said British ambassador Mark Lyall Grant.
US ambassador Samantha Power said Russia “has manipulated. It has obfuscated. It has outright lied”.
Russian ambassador Vitaly Churkin offered a spirited defence, saying Kiev “is waging war against its own people”. He did not deny the Russian presence, saying “there are Russian volunteers in eastern parts of Ukraine. No one is hiding that”.
But Ms Power countered: “A Russian soldier who chooses to fight in Ukraine on summer break is still a Russian soldier.”
Mr Churkin questioned the presence of Western advisers and asked where Ukrainian troops were getting weapons. He said he wanted to “send a message to Washington: Stop interfering in the internal affairs of sovereign states”.
Meanwhile the strategic south-eastern town of Novoazovsk, which has come under shelling for three days, appeared to be in the control of separatists, creating a new, third front in the war.
That raised fears they want to create a land link between Russia and the Crimea Peninsula, which Moscow annexed from Ukraine in March. The town lies along a road connecting the peninsula to Russia.
Col Lysenko said the missiles from Russia were fired at Ukrainian positions at about 11am. About 90 minutes later, two columns, including tanks and other fighting vehicles, began an attack, entering Ukraine from Veselo-Voznesenka and Maximovo in the Rostov region of Russia, he said.
Senior Nato official Brigadier General Nico Tak said the estimate of 1,000 Russian troops in Ukraine was conservative, adding that another 20,000 were right over the border. The troops who entered Ukraine had sophisticated equipment, he said.
“The hand from behind is becoming more and more overt now,” he added.
Russia’s ultimate aim was to stave off defeat for the separatists and turn eastern Ukraine into a “frozen conflict” that would destabilise the country indefinitely, he said.
Nato also produced satellite images to provide what it called additional evidence that Russian combat soldiers, equipped with sophisticated heavy weaponry, are operating inside Ukraine’s sovereign territory. The grainy images of the terrain near Krasnodon, Ukraine, showed what appeared to be a convoy of military units with artillery, and Nato said it had “confidence the equipment is Russian”.
Russia’s ambassador to the EU, Vladimir Chizhov, told the BBC that “Nato has never produced a single piece of evidence” of Russian troops operating in Ukraine. He said the only active duty Russian soldiers in Ukraine were the 10 captured this week, who Moscow insists had mistakenly wandered across the border.
Asked about the Nato images, Russian Defence Ministry spokesman Major General Igor Konashenkov said “to comment on this seriously just makes no sense”.
South-eastern Ukraine has previously escaped the fighting that has engulfed areas to the north and the only way rebels could have reached the south east was by coming through Russia.
If separatists create a land corridor from Russia to Crimea, it could give them or Russia control over the entire Sea of Azov and the gas and mineral riches that energy experts believe it contains. Ukraine already lost about half its coastline, several major ports and significant Black Sea mineral rights in Russia’s annexation of Crimea.
The leader of the uprising, Alexander Zakharchenko, told Russian state TV that up to 4,000 Russians have fought on the separatist side since the armed conflict began in April.