President Barack Obama has said the US will stand by Ukraine in an effort to help it maintain territorial integrity and sovereignty.

After meeting with Arseniy Yatsenyuk, Ukraine's prime minister, at the White House on Wednesday, Obama said the West will be forced to apply a "cost" to Moscow if it does not change its course in Crimea.

Yatsenyuk said his country "will never surrender" to Russia and maintained his stance that Ukraine is ready for talks with Moscow.

He said that Ukraine "is and will be part of the Western world".

The Crimean regional government has scheduled a referendum for Sunday on whether to separate from Ukraine and join the Russian federation.

But Obama said that the US "will not recognise any referendum that goes forward" and expressed hope that last-minute diplomatic efforts might lead to a "rethinking" of Sunday's vote.

No legal basis

The annexation of Crimea by Russia would be a violation of the UN Charter and the referendum on the subject had no legal basis, the G7 group of nations also told Russia.

On Wednesday, the G7 called on Russia "to cease all efforts to change the status of Crimea contrary to Ukrainian law and in violation of international law", according to a statement released by the White House.

"Any such referendum would have no legal effect," the group said. "Given the lack of adequate preparation and the intimidating presence of Russian troops, it would also be a deeply flawed process which would have no moral force. For all these reasons, we would not recognise the outcome."

The G7, the UK, Canada, France, Germany, Italy, Japan and the US - along with EU leaders, said annexation of Crimea would be a "clear violation" of the UN Charter, and would violate Russia's commitments under several other treaties.

"Should the Russian Federation take such a step, we will take further action, individually and collectively," the group said.

Al Jazeera's Nick Spicer, reporting from Berlin, said the statement set the stage for a diplomatic standoff.

"The statement is significant in that the major nations were talking with one voice," he said.

"It shows unity and will put pressure on Russia."

Breakdown in ties

Russian troops moved into Crimea, a predominantly ethnic Russian region, after the February 22 removal in Kiev of Ukraine's pro-Kremlin leader Viktor Yanukovich.

The move by Moscow has led to the biggest breakdown in relations with the West since the Cold War.

The G7 called on Russia to de-escalate the crisis by moving forces back to bases in Ukraine and reducing numbers to pre-crisis levels, opening talks with Kiev and using international mediators to address concerns.

"We also remind the Russian Federation of our decision to suspend participation in any activities related to preparation of a G8 Sochi meeting until it changes course and the environment comes back to where the G8 is able to have a meaningful discussion," they said.

The US Senate is considering the toughest sanctions against Russia since the end of the Cold War in a bid to pressure Moscow to withdraw his troops from Crimea, according to proposed legislation obtained by the Associated Press news agency.

The bill, if approved by Congress on Wednesday, would authorise Obama to impose economic penalties on Russian individuals involved in the takeover of Crimea and other Ukrainian officials.

Beyond sanctions, the bill enables the Obama administration to honour a pledge of $1 billion in loan guarantees to Ukraine's new, pro-Western, government.

And it would enhance the lending capacity of the International Monetary Fund, which some House of Representatives Republicans oppose.

The House of Representatives overwhelmingly backed a similar bill providing assistance to Ukraine last week and passed a resolution calling for sanctions against Russia on Tuesday.

Neither mentioned the IMF, which the US, European countries and others are working with to provide billions of dollars in loans to Ukraine's cash-strapped authorities.