Russian President Vladimir Putin has recognised breakaway rebel regions in Ukraine's east as independent states, effectively ending peace talks there.
The self-declared people's republics of Donetsk and Luhansk are home to Russia-backed rebels who have been fighting Ukrainian forces since 2014, reports BBC.
Russian troops have been ordered to perform so-called "peacekeeping functions" in both regions.
Ukraine's president accused Russia of wilfully violating its sovereignty.
In a late-night televised address to the nation, President Volodymyr Zelensky said Ukraine wanted peace, but declared that "We are not afraid" and "will not give anything away to anyone". Kyiv now needs "clear and effective actions of support" from its international partners.
"It is very important to see now who our real friend and partner is, and who will continue to scare the Russian Federation with words only," he added.
Western powers fear Mr Putin's recognition of the rebel-held areas paves the way for Russian troops to officially enter Ukraine's east.
In recent years, Russian passports have been given out to large numbers of people in Donetsk and Luhansk, and Western allies fear Russia could now move military units in under the guise of protecting its citizens.
Speaking in an hour-long address immediately after Monday's announcement, Mr Putin said modern Ukraine had been "created" by Soviet Russia, referring to the country as "ancient Russian lands".
He referred to Russia having been "robbed" during the collapse of the Soviet Union in 1991, accused Ukraine of being a "US colony" run by a puppet government, and alleged that people were suffering under its current leadership. He painted the 2014 protests which toppled Ukraine's pro-Russia leader as a coup.
'It's unacceptable and unprovoked'
The US swiftly condemned Mr Putin's move, and President Joe Biden signed an executive order that prohibits new investment, trade and financing by Americans in the breakaway regions. The White House said the measures were separate to wider Western sanctions which are ready to go "should Russia further invade Ukraine".
UK Prime Minister Boris Johnson said Russia's actions amounted to "a flagrant violation of the sovereignty and integrity of Ukraine" that breaks international law. He said it was "a very ill omen and a very dark sign". Foreign Secretary Liz Truss said the UK would announce new sanctions on Russia on Tuesday.
The EU pledged to "react with unity, firmness and with determination in solidarity with Ukraine".
Australia's Prime Minister Scott Morrison rejected the suggestion that Russian troops would have a peacekeeping brief, telling reporters: "It's unacceptable, it's unprovoked, it's unwarranted ... some suggestion that they are peacekeeping is nonsense."
The move by Vladimir Putin deepens the ongoing crisis in Ukraine, which is surrounded by more than 150,000 Russian troops on its borders. Russia has denied planning to invade, but the US believes an attack is imminent.
Both Germany's Chancellor Scholz and French President Emmanuel Macron spoke with the Russian leader ahead of his announcement. Western powers have rallied behind Ukraine, promising harsh sanctions against Russia if it invades - though it is not yet clear how far the response to this move will go.
Groundwork for the controversial decision was laid earlier on Monday, when Mr Putin convened Russia's Security Council to discuss recognising the self-declared republics as independent.
Mr Putin's top officials were called to a podium to deliver their views, each speaking in favour of the move. Monday's televised meeting was not entirely smooth, however.
Two officials, during their exchanges with Mr Putin, appeared to reference the possibility to "incorporate" the regions into Russia. On both occasions, Mr Putin corrected them.
"We are not talking about that, we are not discussing that," he said, shaking his head in response to one official's use of the phrase. "We are talking about whether to recognise their independence or not."