Russia has warned it could break diplomatic ties with Ukraine over reported security incidents in Crimea, something it did not do even after annexing the disputed territory or throwing its support behind separatist rebels in the east.
State news agencies quoted prime minister Dmitry Medvedev as saying he would not like the ties to be severed but "if there is no other way to change the situation, the president could take this step".
Moscow annexed Crimea from Ukraine in March 2014 after a hastily called referendum, and a conflict between Russian-backed separatists and Ukrainian forces flared up in eastern Ukraine weeks later.
Despite that and the conflict in the east, which has killed more than 9,500 people, Kiev and Moscow did not break diplomatic ties.
Ukrainian foreign minister Pavlo Klimkin earlier this week spoke of that possibility but said Kiev would not want it because it would mean abandoning four million Ukrainians who live and work in Russia.
Mr Medvedev's announcement comes after Ukraine put its troops on combat alert along the country's de-facto borders with Crimea, amid an escalating war of words with Moscow.
German foreign minister Frank-Walter Steinmeier appealed to Russia and Ukraine to avoid a further escalation in tensions after Moscow accused Kiev of sending "saboteurs" to conduct attacks in Crimea.
He said in comments published by the Welt am Sonntag newspaper that Germany is in contact with both countries, and he plans to speak with Russian counterpart Sergey Lavrov during a planned visit to Russia on Monday.