The White House said President Barack Obama urged Russian President Vladimir Putin in a phone call to agree to a peace deal.
"If Russia continues its aggressive actions in Ukraine, including by sending troops, weapons, and financing to support the separatists, the costs for Russia will rise," the White House statement added.
John Kerry says that the largest threat to Ukraine is Russian aggression but that the west is not seeking conflict with Russia.
The Secretary of State says the US is seeking a diplomatic solution to the conflict in Ukraine but is not prepared to "close our eyes" to Russian tanks and fighters crossing the border.
Speaking after talks in Kiev with Ukrainian President Petro Poroshenko, Kerry demanded an immediate commitment by Moscow to a ceasefire in eastern Ukraine that was backed up by actions on the ground.
Russia has consistently rejected accusations from Kiev and the West that it supports a pro-Russian rebellion in eastern Ukraine with troops and heavy weaponry.
Video footage recorded from Kramatorsk, deep inside Ukrainian-government controlled territory, shows rockets landing on civilian areas.
Video footage appears to show the moment a shell strikes a community soup kitchen in eastern Ukraine.
A mother in eastern Ukraine buries her son - yet another casualty in a civil war that is killing civilians with appalling randomness.