Russian President Vladimir Putin has denied he is "orchestrating events" in Ukraine's Crimea peninsular, and says he is simply responding to a request for help.
He spoke out after Moscow was warned it faces further sanctions if it fails to pull its forces out of Ukraine, as the gravest post-Cold War stand-off between the West and Russia continues.
French Foreign Minister Laurent Fabius said if the first round of sanctions do not work, the West will consider targeting businesses and individuals close to Mr Putin, Reuters reported.
Overnight, US President Barack Obama spoke to Mr Putin on the phone for an hour, trying to convince him to accept the terms of a potential diplomatic solution to the Ukraine crisis.
After the call, the Russian leader said the two sides were still far apart.
It came as Crimea's parliament voted to join Russia, and announced they will hold a referendum in nine days.
The move has sparked a dramatic escalation in the crisis - and was immediately condemned by Mr Obama.
Russian forces outside a military base in Simferopol, Crimea In Russia, the Upper House of Parliament said Crimea has the right to hold a referendum on its future status.
Ukrainian Prime Minister Arseniy Yatsenyuk called it an "illegal decision" by Crimea's authorities.
He said Ukraine is ready for talks with Russia, but Moscow must first withdraw its troops, abide by international agreements and halt its support for "separatists and terrorists".
Ukraine protester Oksana Prots outside Downing Street in London Former Kremlin spin doctor Gleb Pavlovsky said there was now a greater danger of shots being fired in Crimea.
"Russia is encouraging the action of local forces," he said.
"We are at a very dangerous point, and it threatens to push a political crisis in the direction of a military situation."
Laurent Fabius says the West may impose more sanctions on Russia Meanwhile, Ukraine's Paralympic chief Valeriy Sushkevich said his team would compete in the Winter Paralympics in the Russian Black Sea resort of Sochi.
But he said they would pull out of the Games, which begin this afternoon, if Russian forces invade mainland Ukraine.
Mr Obama ordered sanctions on those responsible for Moscow's military intervention in Ukraine, including bans on travel to America and freezing of their US assets
He also echoed European Union leaders and the pro-Western government in Ukraine in insisting the referendum would violate international law.
He said Russians and Ukrainians involved in what he called "threatening the sovereignty and territorial integrity of Ukraine" would be punished - although a US official said Mr Putin was not on the list of those to be sanctioned.
"The proposed referendum on the future of Crimea would violate the Ukrainian constitution and violate international law," Mr Obama told reporters at the White House.
"Any discussion about the future of Ukraine must include the legitimate government of Ukraine."
But in a statement released by the Kremlin early on Friday, Mr Putin said Kiev's new authorities had imposed "absolutely illegitimate decisions on the eastern, southeastern and Crimea regions".
"Russia cannot ignore calls for help in this matter and it acts accordingly, in full compliance with the international law," he said.
Pro-Russians gather outside a military base in Crimea Russia's Foreign Ministry also hit out at Nato's decision to curb its co-operation with Moscow - and said it showed a "biased and prejudiced approach" over Ukraine.
"We see as extremely dangerous attempts to bring in the 'Nato factor' to Ukraine, where the situation is complex and delicate as it is, as it creates additional tension and undermines the prospects for settling the situation," it said in a statement.
On Wednesday, Nato announced a full review of its co-operation with Russia and said it would suspend planning for a joint mission linked to Syria's chemical weapons.
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