Well over 1,000 Russian troops are operating inside Ukraine, marking a significant escalation of Moscow's military involvement in the country, NATO said.
The alliance released satellite images it said showed Russian combat forces, armed with heavy weapons, engaged in military operations inside Ukrainian territory.
"Over the past two weeks we have noted a significant escalation in both the level and sophistication of Russia's military interference in Ukraine," Dutch Brigadier-General Nico Tak, head of NATO's crisis management centre, told reporters at NATO's military headquarters near Mons, Belgium.
"We assess well over 1,000 Russian troops are now operating inside Ukraine," he said. "They are supporting separatists (and) fighting with them."
Ukraine accused Russia of bringing troops into the southeast of the country in support of pro-Moscow separatist rebels.
Tak referred to the Russian actions as "incursions" rather than an invasion.
One satellite picture, taken on Aug. 21, showed Russian military units moving in convoy with self-propelled artillery in the area of Krasnodon, Ukraine, inside territory controlled by Russian separatists.
A second image, taken on Aug. 23, showed Russian self-propelled artillery units set up in firing positions near Krasnodon, supported by logistical vehicles likely to have been carrying extra ammunition and supplies, NATO said.
"This is highly sophisticated equipment which requires a well-trained crew. It takes months to train crews like that. It's extremely unlikely these sorts of units are manned by separatists," Tak said.
"Russia is trying to prevent a defeat of the separatists and wants to hold on to this area. The recent upsurge and now even direct involvement of Russian troops inside Ukraine is aimed at this," he said.
He said the weaponry shown in the images was only the tip of the iceberg of overall Russian troop and weapons movements.
"We have also detected large quantities of advanced weapons, including air defence systems, artillery, tanks and armoured personnel carriers being transferred to separatist forces in eastern Ukraine," Tak said.
"The presence of these weapons along with substantial numbers of Russian combat troops inside Ukraine make the situation increasingly grave," he said.
Despite NATO's concern over the situation in Ukraine, the 28-nation, U.S. dominated alliance has said repeatedly it has no intention of intervening militarily in Ukraine, which is not a NATO member.
It has reinforced the security of NATO allies in the region and will discuss further steps at a summit in Wales next week.