Nato has released satellite images it says show Russian armed forces inside Ukrainian territory to help rebels fight governmentforces.
Ukraine's president held a security council meeting on Thursday over the "sharp aggravation of the situation". Russia has denied the claims.
Earlier, rebels opened a new front in the south by seizing the coastal town of Novoazovsk.
At least 2,119 people have been killed in four months of fighting.
Amid condemnation from Western powers, the United Nations Security Council is holding an emergency meeting in New York to discuss the crisis.
'Significant escalation' Nato Brigadier General Niko Tak said more than 1,000 Russian troops were operating inside Ukraine, both supporting the separatists and fighting on their side.
He told the BBC there had been a "significant escalation in the level and sophistication of Russia's military interference in Ukraine" over the past two weeks.
"[Nato has] 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.
"Russia is reinforcing and resupplying separatist forces in a blatant attempt to change the momentum of the fighting, which is currently favouring the Ukrainian military."
But Russia's ambassador to the European Union, Vladimir Chizhov, said Nato had "never produced a single piece of evidence" for its accusations.
He said the only Russian soldiers on Ukrainian soil were 10 paratroopers captured earlier this week.
German Chancellor Angela Merkel has announced the European Council will discuss taking further sanctions against Russia during a summit on Saturday.