Philip Hammond said UK forces were stepping up their involvement in military exercises in eastern Europe to provide reassurance for Nato members in the region

The UK is considering increasing its participation in Nato military exercises in eastern Europe to reassure allies concerned by Russia's action against Ukraine, Philip Hammond has said.

The Defence Secretary warned Russia faced the threat of economic sanctions which will "seriously hurt" it if Moscow escalates the crisis.

Russia has set out demands for a diplomatic resolution to the crisis in Ukraine, saying the former Soviet republic should be unified in a federation allowing wide autonomy to its various regions.

Foreign minister Sergey Lavrov insisted: " We have absolutely no intention of, or interest in, crossing Ukraine's borders."

His comments followed suspicions that the deployment of tens of thousands of Russian troops near Ukraine is a sign Moscow plans to invade the country following its annexation of the strategic Crimean peninsula.

Mr Lavrov and US counterpart John Kerry met in Paris to discuss Russia's response to a US plan to de-escalate the situation.

Mr Hammond said he hoped a diplomatic solution could be found but it was important to maintain pressure on Moscow following its use of "very crude" tactics against its neighbour.

He told the BBC's Andrew Marr Show: "Everybody is concerned. We are concerned that there might be a further incursion in the territory of a sovereign nation.

"Whether there is or there isn't, we all need to be concerned about the use of this very crude and blunt instrument to try to influence other countries and their behaviour.

"We thought we had seen the end of that kind of thing in Europe."

He added: "Certainly one of the things we are looking at is a greater participation in exercises in the Baltic States, the eastern European Nato member countries as a way of reassuring them about our commitment to Article 5 of the Washington Treaty, the mutual guarantee."

Article 5 of the Nato treaty means that an attack on one nation in the alliance is viewed as an act of aggression against them all.

Mr Hammond said: "We have already announced that we will be providing Typhoon aircraft, based probably in Estonia, to support the Polish-led Baltic air policing mission during the summer.

"We are looking at opportunities to increase participation in planned Nato exercises as another way of reassuring our Nato allies.

"Nobody should be in any doubt to our resolve to live up to our commitments under the Nato treaty."

The talks between Mr Kerry and Mr Lavrov follow a telephone conversation between US president Barack Obama and Russian premier Vladimir Putin.

Mr Obama urged Mr Putin to withdraw his troops from the border with Ukraine. The Russian leader, who initiated the call, asserted that Ukraine's government is allowing extremists to intimidate civilians with impunity - something Ukraine insists has not happened.

Asked if there was the possibility of a breakthrough, Mr Hammond said: "I hope so because we have to find a diplomatic solution to the crisis over the Crimea while continuing to make very clear to the Russians that if they were to go any further into the Ukraine there would be a raft of new measures against them which would seriously hurt the Russian economy."

Shadow foreign secretary Douglas Alexander told the Andrew Marr Show: "I think these talks are vital between the US and Russia but it's equally vital we see talks between Russia and the Ukraine.

"That is the basis on which we can see a lowering of the temperature and a de-escalation of what remain some very serious risks on the eastern Ukrainian border."