Britain will take into account Rwanda's backing for rebels accused of killing and raping in the neighbouring Democratic Republic of the Congo in future decisions to provide aid to the central African state, ministers said.
In a joint statement, Foreign Secretary William Hague and International Development Secretary Justine Greening described evidence presented by a panel of UN experts of Rwanda's involvement with the M23 rebels as "credible and compelling".
The move follows a controversial decision by Greening's predecessor, Andrew Mitchell, on his final day in the post to sanction a further £16 million aid payment to Rwanda at a time when other European donors were suspending aid.
In their statement, Hague and Greening said all outside support for the M23 - who have now seized control of the key Congolese city of Goma - was "unacceptable" and "damaging to the security of the region" as well as breaching UN Security Council resolutions.
"We judge the overall body of evidence of Rwandan involvement with M23 in the DRC to be credible and compelling," they said.
"We will be studying the implications of this report in full, but these allegations will necessarily be a key factor in future aid decisions to the government of Rwanda.
"The UK is greatly concerned about the escalating situation in eastern DRC and the plight of its civilian population."
Mitchell, who was international development secretary until David Cameron's Cabinet reshuffle in September, was widely criticised for his decision to resume aid to Rwanda after it was suspended earlier in the year over concerns about its activities in the DRC.
Appearing before the Commons International Development Committee, he denied he had a "personal interest" in maintaining good relations with the Rwandan leader Paul Kagame having previously been involved in Project Umubano - the Conservative Party's social action project in the country.
Last month Mitchell resigned as Government chief whip following a row with Downing Street police officers in which he was accused of repeatedly swearing and calling them "plebs".
Shadow international development secretary Ivan Lewis said events in DRC showed that Mitchell's decision to reinstate aid to Rwanda had been an act of "enormous folly" and he called on ministers to take firm action.
"As one of Rwanda's closest allies, we have a special responsibility to send the strongest message that the Rwandan government's support for M23 will have serious consequences. William Hague and Justine Greening must stop dithering," he said.
"The Foreign Secretary should summon the Rwandan ambassador to the Foreign Office immediately and leave him in no doubt that the UK is prepared to take serious diplomatic action unless the Rwandan government condemns M23 and ceases all support for their activities."
Prime Minister David Cameron spoke to the presidents of Rwanda and the Democratic Republic of Congo by telephone tonight.
A Downing Street spokesman said: "He used the calls to welcome the joint communique signed by Presidents Kagame, Kabila and Museveni condemning the M23 rebel group and calling on them to pull out of Goma.
"He encouraged both leaders to do all they could to translate the communique into action.
"The Prime Minister urged President Kagame to do everything he could to put pressure on the M23 to withdraw from Goma.
"He made clear that the international community could not ignore evidence of Rwandan involvement with the M23, and that President Kagame needed to show that the government of Rwanda had no links to the M23.
"The Prime Minister then spoke to President Kabila to encourage him to work closely with Rwanda and Uganda to implement the communique. He discussed with President Kabila what more could be done to promote stability and security in eastern DRC."