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Russia's actions in eastern Ukraine are unacceptable and could draw greater sanctions from the US and the European Union, David Cameron has warned.
"I still hope that the Russians see some sense and recognise that they should allow Ukraine to develop as an independent and free country, free to make its choices," Cameron told a news conference in the Australian capital Canberra.
"If Russia takes a positive approach towards the Ukraine's freedom and responsibility we could see those sanctions removed," the Prime Minister continued.
"If Russia continues to make matters worse then we could see those sanctions increased, its as simple as that".
The apparent ceasefire between separatists and government forces in eastern Ukraine is all but non-existent, according to the European organisation monitoring the crisis
An Organisation of Security and Co-operation in Europe told Austrian newspaper Die Presse that the ceasefire and been violated on at least 2,400 occasions.
Since the Minsk agreement...we have more than 2,400 breaches of the cease-fire by militant groups. More than 100 Ukrainian soldiers and dozens of civilians have been killed.
EU foreign ministers are unlikely to step up sanctions against Russia when they meet next Monday, despite disputed reports of Russian troops entering eastern Ukraine over the past two days.
One EU diplomat told Reuters today: "The council (of foreign ministers) will not go for further sanctions despite turmoil and elections."
Another EU diplomat told the news agency: "The existing sanctions are painful for Russia, and they are likely to be sharpened only if the EU has no other choice. We are not there yet, although at some point we might be."
Ukrainian forces are preparing for a possible new attack from pro-Russian separatists following reports of Russian tanks and troops crossing into eastern Ukraine.
Ukraine's Defence Minister Stepan Poltorak told a government meeting rebels had received reinforcements despite a ceasefire being agreed in September, Reuters reports.
He said: "We are repositioning our armed forces to respond to the actions of the (rebel) fighters, I see my main task is to prepare for military action."
Russia has denied claims by Nato and the Ukraine government that it has sent military units into the country.
Moscow has denied claims by Nato and the Ukraine government that it has sent military units into the country.
The denial from Russian's defence ministry comes as Nato's top military commander, US. Air Force General Philip Breedlove, appears to support claims from Kiev about a Russian military operation underway in the east of Ukraine.
We have seen columns of Russian equipment, primarily Russian tanks, Russian artillery, Russian air defence systems and Russian combat troops entering into Ukraine.
Earlier today, Reuters reported that Ukrainian government forces are redeploying in preparation for a possible new offensive by pro-Russian separatists in eastern regions and that columns of Russian tanks had crossed the border overnight.
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The eastern Ukrainian city of Donetsk was under heavy bombardment overnight, the Organisation for Security and Co-operation in Europe said.
The worst shelling in weeks lasted over eight hours.
Ukraine's military accused Russia on Friday of sending a column of 32 tanks and truckloads of troops into the country's east to support pro-Russian separatists fighting government forces.
Russia has denied arming pro-Russian rebels in eastern Ukraine who have broken away from the Kiev government.
A column of 32 tanks has entered Ukraine from Russia, according to the AFP news agency.
The agency reported the Ukrainian military as saying that after the latest fighting left five dead and at least 31 injured.
Military spokesman Andriy Lysenko said a convoy made up of 32 tanks, 16 howitzer cannons and 30 trucks of troops and equipment crossed the border into the rebel-controlled Lugansk region on Thursday.
Another column including trucks and three mobile radar stations crossed another border point in the same region, AFP cited him as saying.
Ukraine's President Petro Poroshenko has called elections being held in the rebel-held east of the country illegitimate.
He said that Ukraine and the rest of the world would reject the results, and called on Russia to do the same.