EU member states have agreed to extend damaging economic sanctions against Russia over the Ukraine crisis by another six months to the end of January 2016, officials say, as NATO announced its largest defence reinforcement since the Cold War.

The agreement by ambassadors from the 28 European Union nations meeting in Brussels will be formalised by foreign ministers from the bloc when they meet next week, the officials said.

"EU foreign ministers will finalise the decision in Luxembourg on Monday," Poland's permanent representative to the EU said on Twitter, while several sources also confirmed the agreement.

The following day, the foreign ministers of France, Germany, Ukraine and Russia are slated to hold talks in Paris, it was announced Wednesday.

It comes as NATO head Jens Stoltenberg said the alliance was implementing its largest defence reinforcement since the Cold War as the region grapples with terrorism and an increasingly assertive Russia.

He spoke a day after Russian president Vladimir Putin said Moscow would add more than 40 new intercontinental ballistic missiles to its nuclear arsenal this year.

"NATO is facing a new security environment, both caused by violence, turmoil, instability in the south — ISIL in Iraq, Syria, North Africa — but also caused by the behaviour of a more assertive Russia, which has used force to change borders, to annex Crimea and to destabilise eastern Ukraine," Mr Stoltenberg said, using another acronym to refer to the jihadist Islamic State group.

"And therefore NATO has to respond. We are responding, and we are doing so by implementing the biggest reinforcement of our collective defences since the end of the Cold War.

"The spearhead force is a key element of this reinforcement, and it's great to see that it's functional, and that it's exercising here in Poland."

He spoke in Zagan in western Poland while attending the first full exercise of NATO's Very High Readiness Joint Task Force (VJTF), or "spearhead" force, created to deter Russia from any action against nervous east European allies that were once ruled from Moscow.

Around 2,100 soldiers from Belgium, the Czech Republic, Germany, Hungary, Lithuania, the Netherlands, Norway, Poland and the United States have been taking part in the NATO exercise since last week.

The VJTF was established in the wake of the alliance's September 2014 summit in Wales, which focussed on reinforcing the alliance's eastern flank amid jitters over Russia.

Pushing for Ukraine solution

It is hoped next week's EU foreign ministers' meetings may create renewed diplomatic momentum towards resolving the violence in east Ukraine, and address tensions between Russian and Western nations over the conflict and sanctions that have arisen from it.

The EU imposed its sanctions targeting Russia's banks, oil and defence sectors after Malaysia Airlines flight MH17 was shot down over rebel-held eastern Ukraine in July 2014.

The United States has also imposed economic sanctions on Russia.

In March, EU leaders agreed in principle to roll the sanctions over by linking them directly to Russia's full implementation of a February ceasefire brokered by France and Germany in Minsk that runs to December this year.

"This is just putting into effect the March summit decision," one EU source said.

"The idea is to extend them to end-January to give time to review progress on the Minsk accord before having to take a new decision."

With the legal text agreed by officials, foreign ministers will likely approve it Monday without discussion.

EU leaders meeting on Thursday and Friday in Brussels will then make the formal announcement, sources said.

The EU's asset freezes and travel bans on leading rebel and Russian figures has incrementally expanded as the conflict spread into eastern Ukraine, claiming more than 6,400 lives.

The decision to impose full-blown economic sector sanctions was much more controversial and painful, with certain member states such as Italy and Germany having particularly important trade and political ties with Moscow.

The shooting down of flight MH17, however, made those bilateral considerations secondary to ensuring a strong collective reaction.

Tensions build over Russian missile plans

The sanctions extension will keep relations between Russia and the West in the deep freeze, a year and a half after the crisis in Ukraine triggered the worst rift since the Cold War.

The NATO chief on Tuesday accused Russia of "dangerous" nuclear sabre-rattling after president Vladimir Putin announced plans to deploy 40 new nuclear ballistic missiles.

Russia has announced it is beefing up its nuclear arsenal with new missiles. ( Reuters: Sergei Karpukhin )

Russia says the move is in response to the US-led NATO military alliance increasing its presence in east European states once ruled from Moscow.

On Wednesday, the commander of US Army Europe, Lieutenant General Ben Hodges, said the United States already has many of the tanks and other vehicles needed to equip an armoured brigade in Europe, but has not decided yet whether to store some of the hardware in eastern Europe.

US officials said over the weekend that the United States planned to store heavy military equipment in the Baltics and eastern European nations to reassure allies unnerved by Russia's intervention in Ukraine and to deter further aggression.

Lieutenant General Hodges said he wasn't surprised by the Russian response to news of the US pre-positioning of equipment "because they have been saying the most outrageous, provocative things now for a year and a half."

"I'm flattered that the Russians think they need 40 nuclear missiles to counter the effect of one US Army armoured brigade combat team," he said.

"It's irresponsible for Russia to talk about nuclear weapons."

Sorry, this video has expired Russia threatens US with retaliation ( Beverley O'Connor )

He said Russia had taken advantage of a relative lull in fighting in eastern Ukraine to "bring in a lot more equipment, a lot more ammunition, air defence capabilities, electronic warfare, command and control."

Earlier this month the Group of Seven top industrialised nations — which expelled Russia last year — warned Moscow it would face increased sanctions for its "aggression" in Ukraine if Mr Putin failed to mend his ways.

"We... stand ready to take further restrictive measures in order to increase the cost on Russia should its actions so require," G7 leaders said after a summit in Germany.

"We recall that the duration of sanctions should be clearly linked to Russia's complete implementation of the Minsk agreements and respect for Ukraine's sovereignty."

The February Minsk accord was concluded after a September peace plan failed to halt the fighting, with French president Francois Hollande and German chancellor Angela Merkel driving the talks as pro-Russian rebels pushed back government forces.

The ceasefire has largely held but Kiev and the rebels swap charges daily over breaches, and observers have reported a sharp pick up in fighting in recent weeks.

AFP/Reuters