European Union leaders would work to block loans for new projects in Russia as well as a range of other sanctions in response to Moscow's actions in Ukraine, according to a draft statement.
The statement said that EU countries would also work together to suspend funding for new projects in Russia through the European Bank for Reconstruction and Development.
Sanctions would also target companies that helped to undermine Ukrainian sovereignty and a first list of companies and people to be targeted with asset freezes would be drawn up by the end of July.
This comes as the US announced its widest-ranging sanctions against Russia yet.
The President of the European Parliament has distanced himself from remarks in which he claimed the UK's nominee to the EU Commission was supposed to have "radical anti-European views".
German politician Martin Schulz had suggested Lord Hill would find it difficult to be approved for a Commission post because of his apparently eurosceptic views.
The remark prompted Ukip leader Nigel Farage to claim Mr Schulz had made a "declaration of war" on the British government's nominee.
But he said he was "glad to hear" from friends that Lord Hill was in fact "more pro-European than anything else in the UK context".
Labour have called the nomination of Lord Hill as the UK's next European Commissioner "a shambles".
David Cameron's choice has come under further scrutiny after it was announced Lord Hill would be selling his shares in a lobbying firm to avoid accusations of a conflict of interest.
Shadow Europe Minister Gareth Thomas said: "David Cameron's approach to Europe goes from bad to worse."
"After his complete failure to stop Jean-Claude Juncker becoming Commission president this shambles will not help in rebuilding our influence to secure crucial reforms."
Britain's nominee for the European Commission is to sell his shares in a public relations and lobbying firm to avoid any suggestion of a conflict of interest.
Lord Hill holds shares in Huntsworth plc, which bought the company he founded, Quiller Consulting, in 2006.
Downing Street does not seem to believe the shareholding does create a conflict of interest, pointing out that Lord Hill has been a minister for four years and sits in the Cabinet.
That raises the question: 'Why are shares in a lobbying firm OK for a British Cabinet Minister, but don't look good for a potential EU Commissioner?"
Lord Hill, David Cameron's nominee as Britain's new European Commissioner, said he would have been "mad" not to accept the Prime Minister's offer.
Asked whether he was a eurosceptic, the former lobbyist said he was "not one for names or badges or boxes" but that he wanted to reform Europe to make it stronger and serve citizens better.
Mr Cameron is in Brussels tonight in a bid to secure one of the key economic portfolios in the European Commission for Britain.
Prime Minister David Cameron will return to Brussels to try and secure a European Commission post for Britain today.
After failing to prevent Jean-Claude Juncker being installed EU president, Mr Cameron has announced that Lord Hill of Oareford is the UK's nomination to serve in his team.
The Prime Minister's spokesman said the peer would be treated with "very very considerable respect" by EU figures.
"In terms of the UK portfolio, our view about the importance of economic priorities to us hasn't changed and Lord Hill's nomination is fully consistent with that," the spokesman added.
European Union heads of state and government are set to attend the EU summit tomorrow, after Jean-Claude Juncker was elected head of European Commission.
The European Commission's newly-elected head Jean-Claude Juncker found himself heckled by Eurosceptics in the European Parliament. Mr Juncker told MEPs (in French): "The single currency protects Europe." He was subsequently heckled by some who deemed it "rubbish".
He accused Ukip leader Nigel Farage, a staunch opponent of the appointment, of "secretly" voting for the former leader of Luxembourg.
Mr Juncker addressed him (in French): "I'm led to believe that your Parliament will vote by a secret ballot. And I understand that, because Mr Farage wouldn't want his voters to discover he voted for me".
The appointment of Jean-Claude Juncker as European Commission president is a "very good sign" for Europe's ability to act, German Chancellor Angela Merkel said, after a meeting with leaders of south east European countries in Croatia.
Ms Merkel added: "I would like to congratulate Jean-Claude Juncker on his election as EU president with a clear result in the first round of voting [...] It will inspire us to resume the work with the European commission."
Jean-Claude Juncker denied being a federalist after being elected as European Commission President.
Mr Juncker told ITV News Political Correspondent Carl Dinnen that he did not want a "United States of Europe". He added: "I will negotiate with David Cameron and others, and will make a fair deal with him".
New Foreign Secretary Philip Hammond has insisted he will not be "threatening" other EU states as the UK seeks to renegotiate its position in the bloc.
Mr Hammond is seen as a more eurosceptic voice than his predecessor, William Hague.
"I'm going to focus on making sure that we have a successful renegotiation with our European partners," he said.
"I don't think the way to enter a negotiation is to start issuing threats."