Western leaders are scrambling to defuse the crisis in Ukraine without shots being fired after the US conceded Moscow had "complete operational control of the Crimean peninsula".

The US secretary of state, John Kerry, was due to fly to Kiev overnight in a further attempt to halt Russia's advance into Ukrainian territory, having conceded that Crimea had fallen to Moscow in a bloodless takeover.

Visiting Kiev on Monday, the British foreign secretary, William Hague, described Russia's incursion into Ukraine as "certainly the biggest crisis in Europe in the 21st century".

Senior US officials dismissed claims that Washington was incapable of exerting influence on the Russian president, Vladimir Putin, but were forced to admit Crimea had been successfully invaded by 6,000 airborne and ground troops in what could be the start of a wider invasion.

"They are flying in reinforcements and they are settling in," said one senior official. Another said: "Russian forces now have complete operational control of the Crimean peninsula."

On Monday morning, Russian soldiers were reported to have further cemented their control of the region overnight, having seized a ferry terminal in the Ukrainian port city of Kerch, about 20km from Russia. The soldiers were reported to be Russian-speaking, driving vehicles with Russian number plates, but refused to confirm their identity. Residents of the neighbouring port town Nikolayev reported Russian troops had arrived overnight, intensifying fears that Moscow will send further soldiers beyond the Russian-speaking Crimean peninsula into eastern Ukraine.

Russia's Interfax news agency reported that Russian fighter jets twice violated Ukraine's air space over the Black Sea during the night. It said Ukraine's air force had scrambled a Sukhoi Su-27 interceptor aircraft and prevented any "provocative actions".

Ukrainian border guards reported a buildup of armoured vehicles near a ferry port on the Russian side of the Kerch channel – a narrow sea channel dividing Russia and Ukraine. A statement from the guard spokesperson said Russian ships had also been moving in and around the city of Sevastopol, where the Russian Black Sea fleet has a base, and that Russian forces had blocked telephone services in some areas.

The Russian foreign minister, Sergei Lavrov, on Monday justified Russia's military presence in Crimea and called on Kiev to abide by an EU-sponsored deal – which Moscow did not sign – negotiated to end the standoff between pro-European protesters and Russian-backed president Viktor Yanukovych, who has since fled Ukraine.

Speaking at the opening of a month-long session of the UN Human Rights Council in Geneva, Lavrov said the use of Russian troops was necessary "until the normalisation of the policital situation" in Ukraine.

"We are talking here about protection of our citizens and compatriots, about protection of the most fundamental of the human rights – the right to live, and nothing more."

"Those who are trying to interpret the situation as a sort of aggression and threatening us with sanctions and boycotts, these are the same partners who have been consistently and vigorously encouraging the political powers close to them to declare ultimatums and renounce dialogue," Lavrov continued.

Earlier, he said he had discussed Ukraine with his Chinese counterpart and their views coincided on the situation there. Lavrov said in a statement that the two veto-wielding UN security council members would stay in close contact on the issue.

So far, Kiev and the west have appeared powerless to counter Russia's tactics. As its military progress into Ukrainian territory continued unapologetically, EU foreign ministers urged high-level mediation to resolve the crisis surrounding the invasion of Crimea – the greatest confrontation between Russia and the west since the collapse of the Soviet Union in 1991.

In the first punitive action against Moscow over its invasion, the leaders of seven of the G8 major world powers formally suspended preparations for a summit scheduled in Russia.

However, in the widely expected announcement, the G7 countries stopped short of demanding that Russia pull back its troops and made no mention of the economic sanctions being touted by the US and UK.

"We note that Russia's actions in Ukraine ... contravene the principles and values on which the G7 and the G8 operate," the leaders of the US, UK, Canada, France, Germany, Italy and Japan said in the statement released late on Sunday.

"As such, we have decided for the time being to suspend our participation in activities associated with the preparation of the scheduled G8 Summit in Sochi in June, until the environment comes back where the G8 is able to have meaningful discussion."

Asked about the seven G8 countries backing out of preparatory meetings ahead of the summit in Sochi, Putin's spokesman, Dimitri Peskov, reportedly replied: "It's not a minus for Russia. It will be a minus for the G8."

The G7 nations called on Russia to address human rights concerns through direct negotiations with Ukraine or by entrusting international monitors. Their statement, also endorsed by the presidents of the European Council and European commission, added: "We also call on all parties concerned to behave with the greatest extent of self-restraint and responsibility, and to decrease the tensions."

It contained no reference to further threats against Russia if it launched a further incursion into Ukrainian territory and no mention of the economic sanctions the US has been threatening. Earlier on Sunday, Kerry told CBS he had spoken to 10 foreign ministers, "the G8 plus some others".

"And all of them, every single one of them, are prepared to go to the hilt in order to isolate Russia with respect to this invasion," Kerry said. "They're prepared to put sanctions in place. They're prepared to isolate Russia economically."

The Ukrainian prime minister, Arseniy Yatsenyuk, insisted that Crimea remained Ukrainian territory despite the presence of Russian military. During a joint news conference in Kiev with Hague, Yatsenyuk said: "Any attempt of Russia to grab Crimea will have no success at all. Give us some time. For today, no military options [are] on the table."

He added that economic and political support were needed urgently. "Real support. Tangible support. And we do believe that our western partners will provide this support."

Hague threatened Russia with sanctions and pledged £10m in financial assistance to Ukraine. He said the UK was not considering military action but "the world cannot just allow this to happen". He later tweeted: "Have held talks in Kyiv wtih Acting President Turchynov and Prime Minister Yatsenyuk. UK will stand by gov and people of #Ukraine."

The British foreign ministry has said it is considering a range of economic sanctions against Russia. Germany, meanwhile, has proposed a creating a "contact group" to work on resolving the crisis by opening a channel of communication between Moscow and Kiev.

"Crisis diplomacy is not a weakness but it will be more important than ever to not fall into the abyss of military escalation," the German foreign minister, Frank-Walter Steinmeier, told reporters ahead of an extraordinary meeting of EU foreign ministers in Brussels.

The German chancellor, Angela Merkel, spoke to Putin on Sunday to encourage him to back down from his invasion and suggest a "fact-finding" mission to Ukraine, possibly led by the Vienna-based Organisation for Security and Co-operation in Europe, currently chaired by Switzerland.

According to US reports, Merkel phoned Barack Obama after speaking to the Russian president and said he had lost "touch with reality". The New York Times reported: "She was not sure he was in touch with reality, people briefed on the call said. 'In another world,' she said."

Hague and Obama's administration have called for Putin to withdraw his troops in Crimea to Russian military bases on the peninsula.

One senior official said the major decision facing Putin was whether to "continue to escalate troop movements into other parts of Ukraine".

"We've already seen the intervention in Crimea," the official said. "It would be even further destabilising to expand that intervention into eastern Ukraine. Our bottom line is they had to pull back from what they've already done, go back into their bases in Crimea. We'll be watching very carefully of course and will be concerned if we saw further escalation into eastern Ukraine."

Kerry will fly to Kiev to meet Ukraine's new government and display "strong support for Ukrainian sovereignty", a state department official said. However, in Washington there were mounting questions, particularly from Republican opponents of the administration, about the influence Kerry and other officials have over Moscow.

Kerry, Obama and other senior officials have spent the last 24 hours attempting to rally an international coalition of countries to condemn Moscow over the invasion, and commit to economic sanctions. Obama spoke on the phone with Merkel, the British prime minister, David Cameron, and the Polish president, Bronisław Komorowski.

"We are concerned as we watch this situation that the Russians have badly miscalculated," one senior official said. "There is a fierce and proud tradition in Ukraine of defending their sovereignty and territorial integrity. So far Ukraine has showed, and Ukrainians individually have showed, marked restraint … but the longer this situation goes on, the more delicate it becomes."

On Sunday, Kerry told CBS leading western nations were prepared to enact economic sanctions against Russia over what he called an "incredible act of aggression".

"You just don't in the 21st century behave in 19th-century fashion by invading another country on completely trumped up pretext," Kerry said. "It is really a stunning, wilful choice by President Putin to invade another country. Russia is in violation of the sovereignty of Ukraine. Russia is in violation of its international obligations."