EU foreign ministers have agreed to renew existing sanctions against Russia and are preparing to blacklist further individuals associated with Moscow's alleged involvement in destabilising Ukraine and with the takeover of Crimea.
However, they stopped short of escalating existing sanctions in the financial services and energy sectors, leaving it up to EU leaders to decide on any such measures when they meet for a formal summit in March.
It is understood EU leaders will decide then whether or not to take tougher action depending on Russia's compliance with the Minsk Agreement.
That accord, reached last September, required Russia to prevent the movement of heavy weapons and not to send troops across the border into eastern Ukraine.
EU foreign ministers were meeting in emergency session following the escalation of fighting in eastern Ukraine, including the shelling of civilian areas in the port city of Mariupol.
An EU source told RTÉ News that in a briefing to foreign ministers, the head of the EU's military committee said the evidence "clearly pointed to Russia arming the separatists with heavy weapons and sending troops in".
Russia has denied supporting rebels in Ukraine.
Following a five-and-a-half hour meeting, foreign ministers agreed to renew until September the existing sanctions against Russia, which were first imposed last March.
The European Commission and the EU's external action service (EEAS) will now produce a list of names to be added to those individuals and entities accused of being involved in Russia's actions in Ukraine.
Foreign ministers will then be required to endorse the new list when they meet in Brussels on 9 February.
It is understood that Greece, along with Italy and Cyprus, insisted on removing the automaticity of new names being added, ensuring that the new names will only be formally agreed by foreign ministers when they return in February.
The new far left Greek government has been criticised for appearing to support Russia in the current crisis.
However, in a news conference the new Greek foreign minister Nikos Kotzias accused what he called "bigger member states" of preventing Greece from having a discussion on the question of new sanctions against Russia.
EU leaders could agree to escalate sanctions in the financial services and energy sectors when they meet for a summit in March.
It is understood that an escalation will depend on how closely Russia complies with the beleaguered Minsk accords.
In July last year, the EU upped sanctions to include financial services and prohibited the use of advanced technologies for the energy sector.
The EU and the United States have long accused Russia of funding and arming pro-Russian separatists in eastern Ukraine, a charge the Kremlin has denied.
Efforts are continuing to have the Minsk Agreement re-instated.
Diplomats say a meeting under the auspices of the OSCE and the so-called Normandy Group of France, Germany, Russia and Ukraine could take place in the coming days.
US-Russian tension could become conflict: Gorbachev
The last Soviet leader Mikhail Gorbachev has accused the United States of drawing Russia into a new Cold War and said he feared hostilities could escalate into armed conflict.
The United States "has already drawn us into a new Cold War, trying openly to achieve its main idea of triumphalism," Gorbachev said in an interview with the Interfax news agency.
"Where will that lead all of us? A Cold War is already being waged openly. What's next?" asked the 83-year-old former Soviet president who during his time in power eased relations with the West but is vilified in Russia for allowing the breakup of the USSR.
"Unfortunately I cannot say for sure that a Cold War won't lead to a 'hot' one. I fear they could take the risk," Mr Gorbachev said, apparently referring to the United States.
Mr Gorbachev in November last year warned that the world was "on the brink of a new Cold War."
In his latest comments, he criticised the West for imposing sanctions on Russia.
"All you hear is about sanctions towards Russia from America and the European Union. Have they totally lost their heads?" Mr Gorbachev asked.
In December last year, Mr Gorbachev in an article urged the US and the EU to "defrost relations" with Russia.
Mr Gorbachev in the past has harshly criticised President Vladimir Putin for an "imitation" of democracy. But recently he has backed the Kremlin line, saying that the world should welcome the annexation of Crimea by Russia for correcting a historic mistake.