Pro-Russian separatists in eastern Ukraine ignored a public call by Russian President Vladimir Putin to postpone a referendum on self-rule, declaring that the vote would go ahead on Sunday.
The decision, which contradicted the conciliatory tone set by Mr Putin just a day earlier, caused consternation in the West, which fears the referendum will tear Ukraine apart.
US Deputy Secretary of State William Burns said Russia was heading down a "dangerous and irresponsible path" and the situation in Ukraine was "extremely combustible".
Denis Pushilin, a leader of the self-declared separatist Donetsk People's Republic, expressed gratitude to Mr Putin but said the "People's Council" had voted unanimously to hold the plebiscite as planned.
"Civil war has already begun," he told reporters. "The referendum can put a stop to it and start a political process."A man holding a Kalashnikov stood behind him.
Political analysts said Mr Putin may have expected the rebels to go ahead with the referendum, showing that they were not under his orders. By distancing himself from a process that will not be recognised by the West, Mr Putin may also hope to avoid further sanctions as earlier measures begin hitting the economy.
His spokesman said the Kremlin needed more information about the rebels' decision. He also said the rebel statement came only after the Western-backed government in Kiev had declared it would press on with its military operation, implying that Ukraine was to blame for the rebels' refusal to heed Mr Putin.
Russian financial markets sank after surging on Wednesday when Mr Putin unexpectedly called for the vote to be delayed and declared that troops were withdrawing from Ukraine's border.
NATO and the United States both said they saw no sign of a Russian withdrawal from the frontier.
When NATO Secretary General Anders Fogh Rasmussen tweeted as much, the Russian Foreign Ministry tweeted back that "those with a blind eye" should read Mr Putin's statement.
NATO has accused Moscow of using special forces in the separatist takeover of mainly Russian-speaking eastern Ukraine after annexing Crimea from Ukraine in March.
Mr Putin acknowledged his troops were active in Crimea after initially denying any role there but says they are not involved in eastern Ukraine, a densely populated steel and coal belt responsible for roughly a third of Ukraine's industrial output.
About 40 armed men attacked a Ukrainian border post on the Russian frontier and tried to seize it, but were beaten off by Ukrainian forces, the border guard in Kiev said.
Mr Putin's call to delay the referendum, followed so quickly by the rebel decision to go ahead with it, have complicated US and European efforts to agree a common policy that might lead to tighter economic sanctions on Russia.
The European Union said shortly before the referendum announcement that the plebiscite "would have no democratic legitimacy and could only further worsen the situation".
Russian Foreign Minister Sergei Lavrov and US Secretary ofState John Kerry discussed by phone joint efforts to defuse the crisis, which also involve the EU and OSCE European security organisation, the Foreign Ministry in Moscow said.