A senior Ukrainian official has said two columns of Russian tanks and military vehicles have fired at a border post, before entering the southeast of the country.

The comments by Colonel Andriy Lysenko, a spokesman for Ukraine's National Security Council, support Ukrainian President Petro Poroshenko's assertion that Russian troops had "entered" the eastern Donetsk region.

According to the Interfax news agency, Mr Poroshenko said Russian troops had come "to the rescue" of pro-Moscow separatists battling Ukrainian forces.

Speaking earlier, he said it followed "the rapidly deteriorating situation in Donetsk region - in particular in Amvrosiyivka and Starobesheve - as Russian troops have entered Ukraine".

A NATO official, meanwhile, said that at least 1,000 Russian troops had entered Ukraine with sophisticated equipment and had been in "direct contact" with Ukrainian forces.

The reports further point towards claims that Russia is operating in the east of the country, although Moscow denies any direct involvement in the conflict.

Mr Poroshenko has cancelled a working trip to Turkey and called an emergency meeting of Ukraine's security and defence council.

Earlier the defence council said the border town of Novoazovsk and other parts of Ukraine's south-east had fallen under the control of Russian forces who were staging a counter-offensive with rebels.

"A counter-offensive by Russian troops and separatist units is continuing in south-east Ukraine," the council said in a post on Twitter.

It said Ukrainian government forces had withdrawn from Novoazovsk "to save their lives" and were now reinforcing troops in the port city of Mariupol.

It added that Russian forces and separatists were combining to launch attacks on Ilovaysk and Shakhtarsk, east of Donetsk.

'A war in Europe'

Ukraine's Prime Minister Arseniy Yatsenyuk accused Russian President Vladimir Putin of having "deliberately unleashed a war in Europe" and called for an emergency UN Security Council meeting.

He also appealed to the United States, European Union and G7 countries "to freeze Russian assets and finances until Russia withdraws armed forces, equipment and agents".

Russia denies arming the rebels and sending troops across the border, and has declined to comment on reports of Russian tanks in Novoazovsk.

"The Russian authorities clearly said many times there are no regular Russian troops there. Russia is not taking part in this armed conflict," said a Russian diplomatic source.

However, the US ambassador to Ukraine has said Russian troops have been directly involved in the fighting.

"An increasing number of Russian troops are intervening directly in fighting on Ukrainian territory," Geoffrey Pyatt wrote on Twitter.

"Russia has also sent its newest air defence systems including the SA-22 into eastern Ukraine and is now directly involved in the fighting."

A top rebel leader, Alexander Zakharchenko, has admitted Russian troops were fighting alongside his insurgents, but said they were on "holiday" after volunteering to join the battle.

Zakharchenko, prime minister of the self-proclaimed Donetsk People's Republic, told Reuters there were about 3,000 Russian volunteers serving in the rebel ranks.

His words have been translated.

NATO has said there could be well over 1,000 Russian soldiers operating inside Ukraine.

The spiralling tensions come two days after Mr Poroshenko and Mr Putin held their first talks in three months and agreed to work towards launching a peace process.

The day before Ukraine captured 10 Russian paratroopers around Amvrosiivka, a town about 20kms from the border with Russia.

German Chancellor Angela Merkel has demanded an explanation from Mr Putin about the activities of Russian troops in Ukraine - while French President Francois Hollande has said it would be "intolerable and unacceptable" if they were involved in any fighting.

The Russian stock market dived on Thursday amid fears grew the country was escalating its role in the five-month conflict, with the MICEX index dropping nearly 2%.

Reporter Katie Stallard is in Moscow. She says this current situation suits Russian interest.

Originally posted 7:50am