Russian President Vladimir Putin has said he has "a right" to send troops into Ukraine but hopes he will "not have to exercise that right".
Speaking at an annual televised question-and-answer session in Moscow, Putin added that the use of force by the interim government in Ukraine against pro-Russian separatists was a "grave crime."
Putin said he hoped the crisis would be resolved through dialogue.
He also admitted for the first time that Russian forces had been active in Crimea, which was annexed by Moscow last month. Previously he insisted that the camouflaged, masked gunmen who took over Crimea were a local "self-defence" force.
Talks have opened in Geneva between Russia, Ukraine, the EU and US – the first since unrest erupted in Crimea.
John Kerry, the US secretary of state, Sergey Lavrov, Russia\’s foreign minister, Andriy Deshchytsia, Ukraine\’s foreign minister and Catherine Ashton, the EU foreign chief, are meeting in a final attempt to engage with Russia before the west hits Moscow with additional economic sanctions.
Ukrainian troops have repelled an overnight attack on their port base in the southeast city of Mariupol, killing three of the assailants and wounding 13 others, Arsen Avakov, the country\’s interior minister, has said.
About 300 people mounted the attack using guns and petrol bombs against interior ministry troops on Thursday, none of whom was hurt, Avakov said on his Facebook page, according to the AFP news agency.
"After attackers threw incendiary devices and Molotov cocktails at the military unit and opened fire at guard posts, the national guards fired warning shots," Avakov said.
After the attack continued, they turned their weapons directly on the assailants.
Sixty-three people were detained and security officials confiscated weapons, communication devices and "Russian cell phones", the statement said.
The operation was still ongoing with additional police patrolling the port city and special forces being helicoptered in as reinforcements, Avakov said.
The latest attack follows the seizure of administrative buildings by pro-Russian separatists in Mariupol and other towns across the restive east of the country.
Ukrainian authorities in Kyiv suffered a serious setback Wednesday in their efforts to restore order in the troubled east of the country when pro-Russian separatists seized several Ukrainian army armored vehicles, hoisting Russia flags on them.
Reports say the occupants were disarmed after the vehicles were blockaded by locals in the city of Kramatorsk.
The incident comes a day after the military began an operation to remove pro-Russian protesters from public buildings across eastern Ukraine.
A soldier manning one of the carriers now under the control of pro-Russian separatists said on Wednesday, that he was a member of Ukraine\’s 25th paratrooper division from Dnipropetrovsk, and that they had switched support to Russia.
"All the soldiers and the officers are here," he said. "We are all boys who won\’t shoot our own people."
Ukraine\’s defence ministery denied the reports of defections and said said a pro-Russian armed group had taken two of its soldiers "hostage" in the separatist eastern region of Lugansk.
The ministry said an officer and a soldier were seized by "extremists" and taken to an unknown destination after they pulled over to repair their vehicle.
Ukraine\’s Prime Minister Arseniy Yatsenyuk angrily reacted to the latest developments telling his cabinet that Russia was "exporting terrorism" to his country.
"As far as I understand, the Russian Federation has a new product for export. Besides exporting oil and gas, Russia has started exporting terrorism to Ukraine," he said. "It seems like there is only one country in the world, namely Russia, that does not see that Russian groups of infiltrators are committing acts of terrorism on the Ukrainian territory."
Earlier on Wednesday, armoured vehicles bearing the Russian flag rolled through the eastern Ukrainian town of Kramatorsk and city of Slovyansk.
Russian Foreign Minister Sergei Lavrov tried to control Moscow’s agenda in a phone conversation with Kerry last week, saying the talks must focus on fostering dialogue among Ukrainians and not on bilateral relations among the participants, according to a statement from Russian foreign ministry.
United Nations Secretary General Ban Ki-moon has expressed his alarm over the "highly volatile situation" and has told the Russian leader that all parties need to "work to de-escalate the situation", his spokesman said.
Russia has accused the new Ukrainian government of provoking the crisis in eastern Ukraine by threatening the country\’s Russian-speaking minority and says far-ultranationalist Ukrainians are at the root of the problem.
But U.N. officials in a report issued Tuesday dubbed as "greatly exaggerated" allegations of harassment of ethnic Russians by Ukrainian nationalists.
As well as suffering the loss of the armored column Wednesday, Ukrainian authorities also failed to prevent the seizing by pro-Russian separatists of a third major government building in the city of Donetsk – this time the office of the city\’s mayor.
The only success Kyiv authorities have had on the ground in the east is regaining control earlier this week of a small airfield in the town of Kramatorsk.
Earlier, NATO announced it was boosting its presence near member states along the Russian border.
"We will have more planes in the air, more ships on the water, and more readiness on the land," Secretary-General Anders Fogh Rasmussen told a news conference. He added that the measures aim to immediately reinforce its military footprint in eastern Europe, in response to Russia\’s moves.
Constant Brant, a NATO public affairs officer in Brussels, said details of the deployment were still being worked out and that Allied Commander Philip Breedlove was expected to make an announcement regarding the make-up of the force in the coming days.
The United States and the European Union have both warned of imposing additional sanctions on top of punitive economic measures taken following Russia’s annexation of Crimea last month.
Language is a highly sensitive issue in eastern Ukraine, where ties with Russia are strong.
A similar move prompted a Russian takeover of Ukraine\’s Crimea region earlier this year.
The US and EU have imposed sanctions on Russian and Crimean people they say were connected with the takeover.
Russia has denied responsibility for the protests in eastern Ukraine, but Western nations have expressed concern over a build-up of Russian troops along the border.