Russia has ordered new military exercises on its border with Ukraine in response to an operation by Kiev against pro-Russian separatists.
Russian Defence Minister Sergei Shoigu said Moscow had been "forced to react" after Ukrainian commandos moved on the separatist stronghold of Sloviansk.
President Vladimir Putin had earlier warned Ukraine of "consequences".
Pro-Russian separatists are occupying key buildings in a dozen eastern towns, defying the central government.
Mr Shoigu was quoted by the Interfax news agency as saying: "If this military machine is not stopped, it will lead to greater numbers of dead and wounded.
"We are forced to react to such a development of the situation."
The exercises will be in Russia's southern and western military districts, with Mr Shoigu adding that "the air force will conduct flights to train for manoeuvres along the state borders".
Moscow has tens of thousands of troops along its side of the border.
Ukraine's acting President, Olexander Turchynov, called on Russia to pull back its troops from the border and end what he called its "blackmail", adding that Kiev would not yield to "Russian-backed terrorists".
UN Secretary General Ban Ki-moon issued a statement saying he was "seriously concerned that the situation could quickly spin out of control with consequences we cannot predict".
He said "military action must be avoided at all costs".
Sanctions 'teed up'
At least two pro-Russian separatists were reported killed as Ukrainian commandos, backed by armoured vehicles, cleared checkpoints on the outskirts of Sloviansk. The Ukrainian units later pulled back.
BBC correspondents visited one checkpoint, south of a village called Makatikha, and reported seeing smoking tyres. But they say there was no live fire and no sign of bodies.
The BBC's Steve Rosenberg, in Sloviansk, said the centre of the town was calm with the makeshift checkpoints set up by pro-Russian activists still in place.
There was also unrest in the south-eastern city of Mariupol, where Interior Minister Arsen Avakov said government forces had ousted pro-Russian militants from city hall.
However, the BBC's Natalia Antelava in Mariupol says that although it appears the mayor and an armed contingent did enter early in the morning, there was later no sign of Ukrainian troops, and pro-Russian activists were planning to re-enter the building.
Speaking on Russian TV, Mr Putin said: "If the regime in Kiev has begun using the army against the population inside the country, then this is undoubtedly a very serious crime."
He warned of "consequences" and said "inter-state relations" would be affected.
Meanwhile, US President Barack Obama has accused Russia of flouting a deal on Ukraine reached in Geneva last week, under which illegal armed groups, including those who have seized public buildings, would return home.
Mr Obama told a news conference in Japan that the US had further sanctions against Russia "teed up".
A contingent of US troops has begun landing in Poland for military exercises amid concerns among Nato's eastern member states about Russia's intentions.
Mr Shoigu said on Thursday: "Planned exercises by Nato forces in Poland and the Baltic countries do not foster normalisation of the situation surrounding Ukraine."
Unrest began in Ukraine last November over whether the country should look towards Moscow or the West.
In other developments on Thursday:
- The funeral has taken place in Horlivka of pro-Ukrainian politician Volodymyr Rybak, who was abducted and killed in Donetsk region
- The IMF says it will meet on 30 April to discuss aid to Ukraine
- US journalist Simon Ostrovsky, held by pro-Russian separatists in Sloviansk, has been freed