Ukraine said its artillery destroyed part of a Russian armoured column that entered its territory overnight and said its forces came under shellfire from Russia on Saturday in what appeared to be a major military escalation between the ex-Soviet states.
Russia's government denied its forces had crossed into Ukraine, calling the Ukrainian report "some kind of fantasy", and in turn raised its own serious concerns about activity by the US-led NATO defence alliance near its borders.
Moscow accused Kiev of trying to sabotage aid deliveries to eastern areas torn by fighting between pro-Russian separatists and the Western-backed government of Moscow's former satellite.
In a call to US Defence Secretary Chuck Hagel, as reported by Russia's state news agency RIA, Defence Minister Sergei Shoigu said Moscow was "seriously concerned" by increased NATO activity and called for a ceasefire to get aid into Ukraine.
The agency did not specify what Western military movements he meant.
NATO said there had been a Russian incursion into Ukraine, which is not a member of its mutual defence pact, but it avoiding calling it an invasion.
Other European capitals accused the Kremlin of escalating a conflict that has revived Cold War-era animosities and chilled the region's struggling economies.
The United Nations said it could not verify the reports from the Ukrainian border but called for an immediate de-escalation.
Kiev and its Western allies have repeatedly accused Russia of arming pro-Moscow separatist rebels in eastern Ukraine, and of sending undercover military units onto Ukrainian soil.
They have also expressed concern Russia may use an aid convoy it has assembled on the border as a pretext for stoking the conflict.
It was not clear whether the armoured column was officially part of the Russian army on active service.
But evidence of Russian military vehicles captured or destroyed on Ukrainian territory would give extra force to Kiev's allegations - and possibly spark a new round of sanctions against the Kremlin.
Andriy Lysenko, a spokesman for the Ukrainian military, told a news briefing that Kiev's forces had picked up a Russian military column crossing the border under cover of darkness.
"Appropriate actions were undertaken and a part of it no longer exists," Lysenko said.
The situation in the conflict zone was becoming increasingly tense, he said, with Ukrainian forces which are fighting pro-Russian separatists also coming under artillery attack from Russian territory.
Ukrainian President Petro Poroshenko briefed British Prime Minister David Cameron on the incident and told him a "significant" part of the Russian column had been destroyed, according to statement from Poroshenko's office.
But Russia's Defence Ministry said no such military force had crossed the border into eastern Ukraine.
State news agency RIA quoted a ministry statement saying: "There was no Russian military column that crossed the Russian-Ukrainian border either at night or during the day."
It called the Ukrainian report "some kind of fantasy".
Britain summoned Russia's ambassador to ask him to clarify reports of a military incursion into Ukraine, and European Union foreign ministers said any unilateral military actions by Russia in Ukraine would be a blatant violation of international law.