Dutch Prime Minister Mark Rutte says sending out an international military force to secure the site of the downed Malaysian Airlines plane in eastern Ukraine is "unrealistic".
The site is currently controlled by pro-Russia rebels who have been accused of shooting down flight MH17.
All 298 people on board - most of them Dutch - died.
In the latest fighting in the area, 13 people were killed as troops try to seize Horlivka from the rebels.
Separately, the US has released images to back its claim of Russian firing into Ukraine.
The images, showing marks on the ground and impact craters, suggest fire from multiple rocket launchers, the US state department says.
The pictures also indicate the separatists are using heavy artillery supplied by Russia, it added.
Russia denies supplying the rebels with heavy weaponry or firing across the frontier with Ukraine.
The rebels have been accused of shooting flight MH17 down by mistake, but Russia blames the Ukrainian military, an allegation Ukraine denies.
The crash site has yet to be properly investigated and some bodies have still not been recovered. An international push is under way to get the site secured.
However, Mr Rutte, speaking to reporters in The Hague, said: "Getting the military upper hand for an international mission in this area is, according to our conclusion, not realistic."
He said it would be "such a provocation to the separatists that it could destabilise the situation".
Mr Rutte said all options were being looked at. The Netherlands, Australia and Malaysia had been considering a joint operation.
Dutch experts on Sunday cancelled plans to head to the site after international officials said fighting in the region was still going on.
"We can't take the risk," said Alexander Hug, of the Organization for Security and Co-operation in Europe (OSCE).
There are still plans for Australia and the Netherlands to deploy 49 police officers, following a deal struck by Malaysia with the rebels to allow international police at the site.
"Our objective is to get in, get cracking and to get out," Australian Prime Minister Tony Abbott said.
The eastern regions of Donetsk and Luhansk have been gripped by heavy fighting as government forces try to retake rebel strongholds.
Andriy Lysenko, a spokesman for Ukraine's security council, said Ukrainian forces were advancing towards the town of Shakhtarsk, 25km (16 miles) from the crash site.
He said the Ukrainian government hoped to "liberate territory" around the downed plane to provide security for international inspectors.
Shelling was also reported close to the site, near the town of Grabove, on Sunday.
Separately, in an interview with Ukraine's Inter TV, Defence Minister Valeriy Heletey confirmed that a column of 41 troops had crossed into Russian territory. An investigation was taking place, he added.
Earlier, Russian media reports said the servicemen had defected to Russia.
Rebels have prevented journalists going to the crash site and Ukrainian government forces are said to be nearby, says the BBC's Tom Burridge, in eastern Ukraine.
A total of 227 coffins containing the remains of the victims have been sent for identification to the Netherlands, which is leading the crash investigation.
The first MH17 victim has been identified, though officials did not reveal any details.
Officials say the exact number of bodies already collected will be determined only after forensic experts have completed their examination.
Russia said on Sunday it had set up its own team of experts to investigate the plane crash, according to RIA Novosti agency.