Frantic diplomatic efforts are continuing in an attempt to defuse the crisis in Ukraine after Vladimir Putin refused to rule out further intervention in the country.
Nato and Russia will hold talks on easing East-West tension over Ukraine on Wednesday as the West steps up efforts to persuade Moscow to pull its forces and avert the risk of a war.
US Secretary of State John Kerry has warned Moscow that it faced economic and political isolation unless it backed off in the Crimea.
But the Russian President has insisted it was "absolutely legitimate" to seek to protect the Russian-speaking population in the country.
Despite ordering thousands of troops to return to their bases after holding exercises near the Ukraine border, Mr Putin reserved the right to take more action as a "last resort".
"Regarding the deployment of troops, the use of armed forces, so far, there is no need for it, but the possibility remains," he said.
President Barack Obama said late last night that he does not see the Russian leader as "unhinged" and believes he can be coaxed into a deal to withdraw troops and end the Ukrainian crisis, the White House.
"We may be able to deescalate over the next several days and weeks, but it’s a serious situation and we’re spending a lot of time on it," Obama said Tuesday.
Kerry reiterated Obama's sentiment, saying that while Western nations "get" the historical context of Russia's desires, Kerry said, "it is not appropriate to invade a country and, at the end of a barrel of a gun, dictate what you are trying to achieve. That is not 21st century, G8 major nation behaviour."
Tensions continued in Crimea, where warning shots were fired by Russian troops at unarmed Ukrainian soldiers who turned up at Beklek air base Tuesday, singing the Ukrainian national anthem and demanding access to their workplace.
Putin insisted that Russian troops in Crimea had been forced to step up security to defend their own bases against threats from "armed nationalists".
Characterising Russia's actions as "humanitarian",Putin accused the West of supporting an "unconstitutional coup" to oust Ukraine's legitimate president Viktor Yanukovych and warned that any punitive response from the international community would backfire by causing "mutual harm" to both Russia and its critics.
But Obama said that Putin was not "fooling anyone" and urged him to comply with international demands to de-escalate the crisis.
The president is looking to Angela Merkel to help mediate a deal and Mr Obama and the pair spoke for more than an hour on Tuesday about a diplomatic solution to end the most serious confrontation with Russia in Europe since the end of the Cold War.
Merkel, who has spoken repeatedly to Putin, reportedly said the Russian president was "in another world", according to the New York Times.
Foreign Secretary William Hague added that Putin's claims to be acting in response to an appeal for help from Yanukovych and in defence of Ukraine's Russian-national population were "baseless".
In a statement to the House of Commons, Hague said there was "a grave risk of escalation or miscalculation and a threat to hard-won peace and security in Europe".
Hague made clear he had no doubt that the troops in Crimea were acting on Moscow's orders, despite Putin's insistence that they were "local self-defence units".
And he insisted that all of Britain's options "remain open" in response to the Russian actions, telling MPs that an inadvertently-revealed document which appeared to rule out trade sanctions was "not necessarily a guide to the decisions that will be made by Her Majesty's Government".
Hague urged Russian ministers to meet him today in Paris at a hastily-arranged conference to discuss the 1994 Budapest Memorandum, under which international powers including Russia gave assurances on the security and territorial integrity of Ukraine as it gave up its nuclear weapons.
British officials are also attending a meeting of the Nato-Russia Council later.
Speaking during a visit to the Midlands yesterday, David Cameron said that his message to the people of Ukraine was that "we back your ability to choose your own future".
The Prime Minister added: "We... are sending a very clear message to the Government in Russia that what has happened is unacceptable.