The crisis in eastern Ukraine is "slipping out of control" and needs to be reined in to avoid direct military confrontation between Ukraine and Russia, Germany has warned.
Foreign Minister Frank-Walter Steinmeier spoke as the EU is poised to consider more sanctions on Russia.
Russia has denied claims by Nato that its forces illegally crossed into Ukraine to support separatists there.
Some 2,600 people have died in fighting between rebels and Ukrainian troops.
The conflict in Ukraine's eastern regions of Donetsk and Luhansk erupted in April following Russia's annexation of Ukraine's southern Crimea peninsula a month before.
Russian President Vladimir Putin has blamed Ukraine for the crisis, comparing its siege of the rebel-held cities of Donetsk and Luhansk to the siege of Leningrad by Nazi Germany in World War Two.
On Friday, Mr Steinmeier warned that the "already dangerous situation" in Ukraine had now entered "a whole new dimension".
"Our hopes that direct talks between [Ukraine and Russia] would contribute to de-escalating the situation have been disappointed," he said in Milan.
"The border infringements have intensified, and raised concerns that the situation is slipping out of control.
"This needs to stop, especially if we want to avoid direct military confrontation between Ukrainian and Russian military forces."
His sentiments were echoed by other foreign ministers:
- France's Laurent Fabius spoke of "unacceptable" intervention by Russian troops in eastern Ukraine
- Sweden's Carl Bildt said a clear message had to be sent to Russia: "We have to be aware of what we are facing: we are in the midst of the second Russian invasion of Ukraine within a year"
- The Netherlands' Frans Timmermans said the presence of Russian soldiers in eastern Ukraine could not "remain unanswered"
Russia could face new restrictions after a summit of the European Union's 28 heads of state in Brussels on Saturday.
The EU and the US have already imposed sanctions against dozens of senior Russian officials, separatist commanders and Russian firms accused of undermining Ukrainian sovereignty.
In late July, the EU also blacklisted some key economic sectors, prompting Russia to retaliate by banning food imports.
Russia's energy minister has warned that the Ukrainian crisis could lead to a disruption of gas supplies to European countries this winter.
Earlier on Friday, Nato held an emergency meeting after releasing satellite images it said showed columns of Russian armed forces inside Ukrainian territory.
Secretary-General Anders Fogh Rasmussen called on Russia to "take immediate and verifiable steps towards de-escalation".
Mr Rasmussen also indicated Nato could consider Ukraine's application to join the alliance, shortly after Prime Minister Arseniy Yatsenyuk announced he was putting Ukraine on course for Nato membership.
Meanwhile, heavy fighting has continued near the strategic port of Mariupol on the Azov Sea. Rebel forces are trying to capture the city but Ukrainian government troops are digging in.
On Thursday the separatists seized the nearby town of Novoazovsk.
The separatists' advance toward Mariupol has raised fears that the Kremlin might seek to create a land corridor between Russia and Crimea.
Rebels are also reported to have surrounded government soldiers in several places further north, near Donetsk city.
A new UN report found that serious human rights abuses had been committed by rebels and Ukrainian forces.
The abuses include the deliberate targeting and killing of civilians trapped in urban areas or trying to flee the fighting via government-established "safe corridors", the study found.
It said that an average of around 36 people had been killed on a daily basis between 16 July and 17 August.
War in eastern Ukraine: The human cost
- At least 2,593 people killed since mid-April (not including 298 passengers and crew of Malaysian Airlines MH17, shot down in the area) - UN report on 7 August
- 951 civilians killed in Donetsk region alone, official regional authorities said - 20 August
- In some particularly dangerous places, such as Luhansk region, victims are said to have been buried informally, making accurate counts difficult
- Rebels (and some military sources) accuse the government of concealing true numbers
- 155,800 people have fled elsewhere in Ukraine while at least 188,000 have gone to Russia.