More than a thousand Russian troops are operating inside Ukrainian territory according to NATO, who released satellite images showing forces with heavy weaponry.

"Over the past two weeks we have noted a significant escalation in both the level and sophistication of Russia's military interference in Ukraine," Dutch Brigadier-General Nico Tak, head of NATO's crisis management centre said reports Reuters.

"We assess well over 1,000 Russian troops are now operating inside Ukraine," he said, referring to Russia's actions as "incursions" rather than an invasion. "They are supporting separatists (and) fighting with them."

"We have also detected large quantities of advanced weapons, including air defence systems, artillery, tanks and armoured personnel carriers being transferred to separatist forces in eastern Ukraine," he said.

The UN Security Council met in an emergency session, and NATO and EU leaders said they will will consider a response on Friday, but Russia denied that its troops where in Ukraine.

Ukrainian President Peter Poroschenko also said that Russians were supporting pro-Moscow rebels, who captured Novoazovsk and other parts of southeast Ukraine.

"Today we reached the Sea of Azov, the shore, and the process of liberating our land, which is temporarily occupied by the Ukrainian authorities, will keep going further and further," Alexander Zakharchenko, prime minister of the self-proclaimed Donetsk People's Republic, told Reuters in an interview.

Western governments have condemned Russia’s actions, with German Chancellor Angela Merkel saying the option of further sanctions against Russia will be discussed at an EU summit on Sunday.

Referring to talks that Russian President Vladimir Putin held with Poroshenko two days ago, British Premier David Cameron said: "It is simply not enough to engage in talks in Minsk, while Russian tanks continue to roll over the border into Ukraine. Such activity must cease immediately."