German Chancellor Angela Merkel says the European Union will impose more sanctions on Russia following its decision to annex Ukraine's Crimean Peninsula and will suspend all G8 meetings until the political situation changes.

Merkel told the country's Parliament on Thursday ahead of an EU summit in Brussels that the bloc would expand a freeze of bank accounts and travel bans of people that have been linked to the crisis.

Earlier this week, the EU and the United States slapped sanctions on certain individuals that were involved in what they say was the unlawful referendum in Crimea over joining Russia.

She also said that the G8 will not meet until the situation changes. Russian President Vladimir Putin was due to host leaders from the top industrial countries in Sochi in June.

Warning ... German Chancellor Angela Merkel says that the EU will impose more sanctions on Russia. Credit:AP

AP