The European Union readied a fresh wave of sanctions against Russia on Saturday with warnings that the escalating crisis in Ukraine was putting all of Europe at risk of conflict.

Ukrainian President Petro Poroshenko, in Brussels to plead with EU leaders for tougher measures, said Kiev and Moscow were on the verge of "full-scale war" that would have serious implications for Europe.

Fears of a wider confrontation spiraled after claims that Russia has sent troops to help fight a new offensive by pro-Kremlin rebels that has wrested several southeastern Ukrainian towns from Kiev's control.

EU Commission head Jose Manuel Barroso warned that the crisis was near a "point of no return" and said Brussels had drawn up new sanctions against the Kremlin.

The EU delivered a further riposte to Russia on Saturday when it elected Polish Prime Minister Donald Tusk, a vocal Kremlin critic, as its next president.

Poroshenko said Ukraine was the victim of "foreign military aggression and terror" and alleged that thousands of Russian troops and hundreds of tanks were on Ukrainian soil.

"Today we are talking about the fate of Ukraine, tomorrow it could be for all Europe," he warned before meeting EU leaders.

Speaking later, he added: "I think that we are very close to the point of no return, the point of no return is full-scale war, which is already happening in the territories controlled by the separatists." 

Lithuania's President Dalia Grybauskaite, whose Baltic nation is wary of a resurgent Russia on its own borders, said the EU should send military equipment to Kiev.

"Russia is at war against Ukraine and that is against a country which wants to be part of Europe," she said.

"Russia is practically in a state of war against Europe."

French President Francois Hollande said the EU would "no doubt increase" sanctions, while British Prime Minister David Cameron said the lessons of history demanded action.

The European Union and the United States have already slapped tough sanctions on Russia over its role in the Ukraine crisis, including Moscow's annexation of Crimea in March.

New measures were likely to focus on extending current sanctions covering financial services, armaments, dual-use products and energy, Finland's Prime Minister Alexander Stubb told reporters.

The naming of Poland's Tusk as the future head of the European Council was a further strengthening of Europe's stance against what the outgoing president, Herman Van Rompuy, called "the gravest threat to continental security since the Cold War."

NATO said Thursday that Russia had sent at least 1,000 troops to fight alongside the insurgents, as well as air defense systems, artillery, tanks and armored vehicles, and had massed 20,000 troops near the border.

The fresh rebel offensive has raised fears the Kremlin could be seeking to create a corridor between Russia and the strategic Black Sea peninsula of Crimea.

Moscow has denied any troop presence in its western neighbor, despite the capture of paratroopers by Kiev and reports of secret military funerals being held in Russia. 

Ukraine has openly asked the EU for military help, and on Friday Kiev announced that it would also seek membership of the NATO alliance, a move sure to further enrage the Kremlin.

Poroshenko will travel to the NATO summit in Wales next week to meet US President Barack Obama and seek practical help from the Western alliance.

The sudden surge in tensions came only days after Poroshenko and Russian President Vladimir Putin held talks which failed to achieve any breakthrough.

Poroshenko said Saturday that fresh peace talks grouping representatives of Kiev, Moscow and the Organization for Security and Cooperation in Europe (OSCE) would take place in Minsk, the capital of Belarus, on Monday.

But on the ground there was no sign of a let up in the fighting, as the rebels vowed to launch a new military push.

Alexander Zakharchenko, the prime minister of the self-proclaimed Donetsk People's Republic, told Russian media on Saturday that rebels were "preparing a second large-scale offensive."

Kiev said Saturday that another air force plane has been shot down in the east, blaming it on a "Russian anti-aircraft system".

Faced with the reinvigorated insurgent push that has dramatically turned the tide of the conflict, Ukrainian forces have been trapped in a string of towns in the southeast.

Kiev's contingents began a withdrawal from besieged positions near the transport hub of Ilovaysk, which lies east of the main rebel stronghold of Donetsk, after holding ground without reinforcements for 10 days.

In the Azov Sea port city of Mariupol to the south of Donetsk, citizens dug trenches as they geared up to defend the city from a feared rebel offensive from the east.