NATO's chief warned that Europe's peace and security were at risk from Russian threats of a military incursion in Ukraine as Moscow faced a barrage of warnings of reprisals, including the loss of its prestigious G8 seat.

"What Russia is doing now in Ukraine... threatens peace and security in Europe. Russia must stop its military activities," Anders Fogh Rasmussen said as he went into crisis talks on Ukraine with the alliance's 28 ambassadors.

Speaking as the interim authorities of the former Soviet state called up all military reservists, Rasmussen said he had convened the North Atlantic Council "because of President Putin's threats against this sovereign nation."

"Today we will discuss the implications for European security."

The talks, held on the eve of an emergency EU foreign ministers' meeting in Brussels, come as global powers scramble to respond and amid talk of a possible extraordinary European Union summit next week.

Britain and France meanwhile announced they were suspending preparations for a June summit in Sochi of the Group of Eight developed nations, joining Canada and the United States in sanctioning President Vladimir Putin for his stance on Ukraine.

Saying Ukraine's sovereignty and territorial integrity had been violated, Britain's Foreign Secretary William Hague flew to Kiev for talks with its new leaders, adding: "This cannot be the way to conduct international affairs."

His US counterpart John Kerry warned that Putin might even lose his G8 seat as well as face asset freezes on Russian business.

"There is a huge price to pay," Kerry told NBC.

"If Russia wants to be a G8 country it needs to behave like a G8 country," he said on CBS.

Held only four days after NATO defence ministers gathered in Brussels to warn Russia -- apparently with little effect -- not to take steps that could be "misinterpreted", Sunday's closed-door talks come as the escalating tension in Crimea threatens to open the West's worst crisis with Moscow since Cold War days.

Poland earlier called for the NATO meeting over the developments in Ukraine, citing Article 4, which provides for consultations with allies.

NATO however said the meeting was not being held under Article 4 of the North Atlantic Treaty, the alliance's founding document.

Most recently used by Turkey over Syria, Article 4 enables a member state to call a NATO meeting for consultations if its independence or security are under threat.

- Upping the military stakes -

Ukraine signed up to a partnership deal with NATO in 1997 but is not a full member. It was given the nod to eventually join at a 2008 summit in a move that infuriated Russia.

It was then that Putin is famously reported to have said to then US president George Bush that "Ukraine is not even a state."

Two years later, the country's now ousted pro-Russian leader, Viktor Yanukovych, ditched the NATO membership bid.

Diplomats said little more than a statement of concern was expected from the talks and one senior diplomat said on condition of anonymity that neither economic sanctions nor NATO action seemed appropriate at the moment.

"We need to talk to Putin, who has his own good reasons for doing bad things," the source told AFP. "The situation is extremely dangerous. We need a way out of this 'us' and 'them' Cold War syndrome."

French Foreign Minister Laurent Fabius, who along with Hague have urged Ukrainians and Russians to engage in direct talks over the crisis, appeared to have a similar views.

"Russia is traditionally our friend. We want a traditional friend far more than sabre-rattling," Fabius said.

Scenarios being mulled include calling the two sides to communicate through organisations such as the United Nations or even finding a mediator nation, for example among the non-aligned, or traditional Russia ally China.

Members of the North Atlantic Treaty Organisation moreover appear divided over what stand to take on the tug-of-war with Russia over Ukraine, with former Soviet satellites far more hawkish than some.

"No one seriously believes there will be a military response," said a diplomat from one of the larger members who asked not to be identified.

Some nations believe "waving the NATO flag" could be counter-productive, upping the military stakes instead of de-escalating the tension.

"If Putin stops now, he can have both: annexation of Crimea and good relations with West," tweeted Uli Speck, a Carnegie Institute analyst.