Washington (AFP) - US President Barack Obama agreed to hold off a controversial decision on sending arms to Ukraine until German-led efforts to broker a ceasefire with Russia are given a chance.

Hosting Chancellor Angela Merkel at the White House, Obama said he hoped she could reach a deal with Russian President Vladimir Putin to end 10 months of bloodshed in eastern Ukraine, but warned more punitive measures are in the pipeline if that fails.

Steep Western sanctions and low oil prices have crippled Russia's economy but have so far failed to dissuade Putin's government from backing Ukrainian separatists. Moscow denies it is doing so.

"My hope is that through these diplomatic efforts those costs have become high enough that Mr Putin's preferred option is for a diplomatic resolution," Obama said.

"I won't prejudge whether or not they'll be successful," he added. "If they are not, then we will want to raise the costs. And we will not relent in that."

Obama indicated that further sanctions and "lethal defense" assistance are now on the table, but said no decision had been made yet.

Merkel has opposed sending arms, warning it would further escalate a war that Ukraine cannot win against the much larger and better equipped pro-Russian forces.

But she acknowledged that a drive to reach a ceasefire deal with Putin -- after he reneged on a previous agreement -- may not succeed.

"We have no guarantee," she said in a joint press conference ahead of further talks this week. "I cannot give you a guarantee for the outcome of the Wednesday talks and maybe nothing will come out of it.

"I, myself, would not be able to live without having made this attempt."

- 'Order of Europe' -

The conflict has already killed more than 5,000 people.

With violence escalating by the day, the stakes have become ever-higher as Russian-armed rebels have eaten further into Ukrainian territory.

"If we give up the principle of territorial integrity, we will not be able to maintain the peaceful order of Europe," warned Merkel, who later took her plea for time to strike a peace deal to Canada.

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Obama lent credence to the view that Ukraine, Russia and the whole of Europe is now at a fork in the road.

"We're in absolute agreement that the 21st century cannot stand idle, have us stand idle and simply allow the borders of Europe to be redrawn at the barrel of a gun," he said.

Republicans lambasted Obama for engaging in more talk and accused him of abandoning Ukraine.

"President Obama's continual weakness in the face of aggression is making the world a more dangerous place," stormed Republican Senator Lindsey Graham.

"It's a sad fact that our enemies are seldom challenged while our friends are constantly undercut and abandoned."

Officials from Ukraine, Russia, Germany and France are still hammering out the details for a four-way summit slated for Wednesday.

Ahead of the possible meeting in Minsk, the European Union decided to hold off implementing new sanctions against Russia, giving space for talks.

"The implementation was delayed for several days at the request of Ukrainians who wanted that the other side has less pretext to refuse negotiations or negotiate in an unconstructive manner in Minsk summit on Wednesday, if it happens," Lithuania's foreign minister Linas Linkevicius told AFP.

EU foreign ministers had been set to formally sign off on adding 19 more people to a sanctions list over Moscow's backing of the separatists.

- Sticking points -

Putin has warned that a "number of points" still needed to be agreed before the Minsk meeting can take place and wrangling was set to be intense as foreign ministry officials from the four nations met in Berlin.

Based on a largely ignored peace deal agreed in September in Minsk, the new plan may extend rebel control over territory the rebels have seized in recent weeks, although Kiev is adamant the demarcation line agreed in September should not be shifted.

French President Francois Hollande has said the proposal includes the creation of a 50 to 70-kilometer (31 to 44-mile) demilitarized zone around the current frontline.

The issues on the table include questions about levels of regional autonomy and future elections in rebel-controlled areas, said German foreign ministry spokesman Martin Schaefer.

Fresh fighting over the past 24 hours between Ukraine government forces and pro-Russian rebels left at least 11 civilians and nine Ukrainian troops dead, Kiev said.

Ukraine's military said that 1,500 Russian troops and convoys of military hardware had crossed into the country over the weekend.