Vladimir Putin has been branded a ‘thug’ and a ‘liar’ by one of Britain’s top diplomats as the European Union turned the screw on Russia's banks, arms traders and energy firms.

Sir Peter Westmacott, the UK ambassador to the US, said Moscow’s aggression in Ukraine was starting to look like ‘the wrong call’ and the West’s firm response to the downing of Malaysian Airlines plane was starting to have an impact.

David Cameron met families of British victims of the atrocity today, as he warns Russia has failed to stem the flow of weapons across the border to Ukraine since a surface-to-air missile was used to destroy flight MH17, killing all 298 people on board.

Sir Peter Westmacott, the UK ambassador to the US, branded Russian President Vladimir Putin a ‘thug’ and a ‘liar’

EU diplomats met in Brussels today to agree a fresh round of sanctions designed to cripple the Russian economy and target allies of Vladimir Putin.

The new measures include an arms embargo, a ban on the sale of dual use and sensitive technologies, and a ban on the sale of bonds and equities by state-owned Russian banks in European capital markets.

Eight more officials - including four members of President Vladimir Putin's inner circle - are also expected to be subjected to asset bans and travel freezes. The White House indicated that additional US sanctions can be expected to follow the EU announcement.

Mr Cameron said: ‘The sanctions relate to Vladimir Putin and Russia’s behaviour.

'We want to make it absolutely clear that Russia’s behaviour in destabilising another country is unacceptable and therefore the EU with the US will be imposing further sanctions unless that behaviour changes.

‘We are united in sending that tough message, and it is a message that will be backed by tough action.’

It marks the toughest package of measures against Russia so far, amid growing anger at Moscow's aggression.

In an extraordinary public attack on the Russian President, Sir Peter said Mr Putin’s behaviour in Ukraine had been ‘thuggish, dishonest and reckless’.

He added: ‘He thought he’d done pretty well after he stole Crimea. It doesn’t look so good now.’

Speaking on American television channel MSNBC, he said: ‘It’s starting to look like this was the wrong call. This is a defining moment for what is going on in Ukraine.

‘We’ve had some very bad behaviour from the Russian side for a long time now, and we’ve had this terrible atrocity - the shooting down of the aircraft.

'We have to change the cost/benefit analysis for Putin, for the Russian people, for the government that they have elected here.’

Last night Mr Cameron spoke to US President Barack Obama, French President Francois Hollande, German Chancellor Angela Merkel and Italian PM Mario Renzi to back ‘a strong package of sectoral sanctions as swiftly as possible’.

Prime Minister David Cameron will meet families of British victims of the MH17 atrocity today as Brussels prepares to step up sanctions against Russia

Defence Secretary Michael Fallon (left) announced Britain would send 1,300 troops to take part in Exercise Black Eagle during a visit to Warsaw with Foreign Secretary Philip Hammond (second left), meeting their Polish counterparts, Polish Foreign Minister Radoslaw Sikorski (right) and Defence Minister Tomasz Siemoniak (second right)

Downing Street said Russia has ‘failed to take the steps necessary to de-escalate the crisis’ in Ukraine, including ending support for the separatists and stopping the flow of weapons across the border.

‘Indeed the latest information from the region suggests that even since MH17 was shot down, Russia continues to transfer weapons across the border and to provide practical support to the separatist,’ a spokesman said.

However, former foreign secretary Sir Malcolm Rifkind warned m ore than 'symbolic' sanctions are needed for Russian president Vladimir Putin to back down, former foreign secretary Sir Malcolm Rifkind has warned.

Up till now these measures used have been pretty useless Senior Tory MP Sir Malcolm Rifkind

The veteran Tory politician said the measures used to date had been 'pretty useless' and urged the international community to take more serious steps that would cause economic damage.

He told BBC Radio 4's Today programme: 'This isn't about his popularity, this is about imposing sanctions that will require Putin to change his policy. Up till now these measures used have been pretty useless.

'If you impose visa controls or asset freezes on 50 or 60 of his cronies, well I'm sure they are very disappointed, (but) why should Putin change his foreign policy?

'When you get into the situation of preventing them having access to financial markets, preventing high quality technology exports to their energy industry, that goes to the very heart of the Russian economy.

'We saw with Iran that the whole impact of financial, banking and economic sanctions is what has brought them to negotiate with the US and with the international community on their nuclear weapons.

'This is not about popularity, it is about economic damage.'

Britain has been pushing for sanctions where there is ‘broad consensus’ with other EU countries, including ‘the financial sector, the defence sector and the hi-tech energy sector’.

Carnage: Australia's deputy police commissioner warned that the crash site is a 'highly volatile area' and that the purpose of their visit is to conduct a detailed examination of the area

Tragic: The news comes as UN human rights chief Navi Pillay said the downing of flight MH17 in eastern Ukraine may constitute a 'war crime

PM TO MEET FAMILIES OF BRITONS KILLED IN MH17 PLANE ATROCITY Prime Minister David Cameron is to meet families of the Britons killed in the MH17 crash today. Ten UK nationals were among the 298 passengers and crew killed when the Malaysian Airlines flight was shot down over eastern Ukraine. Downing Street said all of the families have been invited to meet the Prime Minister and seven are expected at the meeting in Number 10. 'It is really for the Prime Minister to express his sorrow and condolences about what's happened personally, face to face,' a spokesman for Mr Cameron said. 'He will talk about the response so far from the UK and other partners in the international community.' Mr Cameron will also seek to 'establish if there are more things that we should be looking at and doing'. Advertisement

The deal on so-called ‘tier three’ measures covering whole sectors was agreed by EU ambassadors today.

However, oil giant BP has warned that further international sanctions on Russia could have a "material adverse impact" on the company.

The UK business owns a 19.75 per cent stake in Russian oil firm Rosneft, which is the subject of sanctions preventing it from using US financial institutions for new loans over a period longer than 90 days.

There is also expected to be a new US and EU-wide embargo on future arms sales to the Russian military.

It will be the first time that entire sectors of the Russian economy, rather than individuals or firms, have been targeted by the West.

Last week EU member states agreed to add 15 individuals and 18 entities to the list of those subject to asset freezes under the 'tier two' powers.

Among them are head of the Russian Federal Security Service Alexander Bortnikov, Sergei Beseda, head of the FSB department that oversees international operations and intelligence activity and four members of Russia's Security Council.

The list, published in the EU's Official Journal, brings to 87 the total number of people subject to sanctions in relation to Russia's annexation of the Crimea.

However, Mr Cameron wants to now go further and extend it to cover ‘those with influence on the Russian regime’.

It will include travel bans and asset freezes aimed at the ‘cronies’ of Vladimir Putin whose billions depend on their influence in the Kremlin.

Meanwhile, it emerged Britain is to send more than 1,300 British troops to Poland as a show of strength against Russia's annexation of Crimea and 'destabilisation' of eastern Ukraine.

Defence Secretary Michael Fallon said Exercise Black Eagle would be the largest British commitment to the region since 2008.

The UK has already deployed RAF Typhoon jets to the Nato Baltic Air Policing mission.

And at the end of light infantry troops from 1st Battalion, The Duke of Lancaster’s Regiment will take part in Exercise Sabre Junction in Poland, a US-led exercise involving 16 Nato and partner nation.