Russian President Vladimir Putin has demanded and won his parliament's approval to invade Ukraine.
The US has responded by calling for the swift deployment of international monitors from the United Nations and the Organisation for the Security and Cooperation in Europe (OSCE) to Ukraine to help stem the escalating crisis there.
The new Ukrainian government has warned of war, put its troops on high alert and appealed to NATO for help.
Mr Putin has asserted the right to send troops to a country of 46m people in the biggest confrontation between Russia and the West since the Cold War.
Prime Minister Arseny Yatsenyuk is leading a Ukrainian government that took power after Moscow's ally Viktor Yanukovych fled a week ago.
Mr Yatsenyuk said Russian military action "would be the beginning of war and the end of any relations between Ukraine and Russia".
Acting President Oleksander Turchynov ordered troops to be placed on high combat alert.
Mr Putin told US President Barack Obama by telephone that Moscow reserves the right to protect its interests and those of Russian speakers in Ukraine.
In a statement posted online, the Kremlin said Mr Obama had expressed concern about the possibility of Russian military intervention in Ukraine.
"In response to the concern shown by Mr Obama about the plans for the possible use of Russia's armed forces on the territory of Ukraine, Mr Putin drew attention to the provocative, criminal actions by ultra-nationalists, in essence encouraged by the current authorities in Kiev," the statement said.
He said:"The Russian President underlined that there are real threats to the life and health of Russian citizens and compatriots on Ukrainian territory."
Mr Putin stressed that if violence spread further in the eastern regions of Ukraine and in Crimea, Russia reserves the right to protect its interests and those of Russian speakers living there."
Subsequently, Mr Obama said that he told Mr Putin that Russia had committed a clear violation of Ukrainian sovereignty by sending forces into Crimea and warned of consequences.
The White House said in a statement outlining what was discussed in a 90-minute phone call between Mr Obama and Mr Putin.
The White House said the US will suspend participation in preparatory meetings for G8 summit in Sochi, Russia.
The United States will suspend upcoming participation in preparatory meetings for the G-8.— @NSCPress (@NSCPress) March 1, 2014
Foreign Minister Andriy Deshchytsya said he had met European and US officials.
He said he had sent a request to NATO to "examine all possibilities to protect the territorial integrity and sovereignty of Ukraine".
Mr Putin's move was a direct rebuff to Western leaders who had repeatedly urged Russia not to intervene.
Troops with no insignia on their uniforms but clearly Russian - some in vehicles with Russian number plates - have already seized Crimea.
Crimea is an isolated peninsula in the Black Sea where Moscow has a large military presence in the headquarters of its Black Sea Fleet.
Kiev's new authorities have been powerless to stop them.
Russian forces solidify control of Crimea
The Russian forces solidified their control of Crimea and unrest spread to other parts of Ukraine.
Pro-Russian demonstrators clashed, sometimes violently, with supporters of Ukraine's new authorities and raised the Russian flag over government buildings in several cities.
Mr Putin asked parliament to approve force "in connection with the extraordinary situation in Ukraine, the threat to the lives of citizens of the Russian Federation, our compatriots" and to protect the Black Sea Fleet in Crimea.
The upper house swiftly delivered a unanimous "yes" vote, shown live on television.
Western capitals scrambled for a response, but it was limited to words.
A US official said Defense Secretary Chuck Hagel had spoken to his Russian counterpart Sergei Shoigu.
The official said there had been no change in US military posture.
EU foreign affairs chief Catherine Ashton urged Moscow not to send troops.
NATO Secretary-General Anders Fogh Rasmussen said:
"Urgent need for de-escalation in Crimea, NATO allies continue to coordinate closely."
Mr Putin said his request for authorisation to use force in Ukraine would last "until the normalisation of the socio-political situation in that country".
His justification being the need to protect Russian citizens.
This was the same as he used to launch a 2008 invasion of Georgia, where Russian forces seized two breakaway regions and recognised them as independent.
So far there has been no sign of Russian military action in Ukraine outside Crimea.
It is the only part of the country with a Russian ethnic majority, which has often voiced separatist aims.
A potentially bigger risk would be conflict spreading to the rest of Ukraine, where the sides could not be easily kept apart.
As tension built, demonstrations occasionally turned violent in eastern cities, where most people, though ethnically Ukrainian, are Russian speakers and many support Moscow and Mr Yanukovych.
Demonstrators flew Russian flags on government buildings in the cities of Kharkiv, Donetsk, Odessa and Dnipropetrovsk.
In Kharkiv, scores of people were injured in clashes when thousands of pro-Russian activists stormed the regional government headquarters.
They fought pitched battles with a smaller number of supporters of Ukraine's new authorities.
Pro-Russian demonstrators wielded axe handles and chains against those defending the building with plastic shields.
In Donetsk, Mr Yanukovych's home region, politicians declared they were seeking a referendum on the region's status.
Thousands of followers, holding a giant Russian flag and chanting "Russia, Russia" marched to the government headquarters and replaced the Ukrainian flag with Russia's.