President Vladimir Putin ordered Russian troops into two Moscow-backed rebel regions of Ukraine Monday, prompting a furious response from the West with the United States denouncing the move at the UN Security Council as a "pretext for war".

After weeks of massing troops around Ukraine, Putin recognised the independence of the former Soviet state's rebel-held Donetsk and Lugansk regions -- paving the way for the deployment of a potential invasion force.

In an often angry 65-minute televised national address from his office, Putin railed against Ukraine as a failed state and "puppet" of the West.

Putin said it was necessary to "take a long overdue decision, to immediately recognise the independence" of the two regions.

Russian President Vladimir Putin chaired a long meeting of his Security Council over the Ukraine crisis
Russian President Vladimir Putin chaired a long meeting of his Security Council over the Ukraine crisis SPUTNIK via AFP / Alexey NIKOLSKY

In two official decrees, the Russian president instructed his defence ministry to assume "the function of peacekeeping" in the separatist-held regions.

Moscow's gambit triggered international condemnation and a promise of targeted sanctions from the United States and the European Union -- with a broader package of economic punishment to come in the event of further incursion into Ukraine's territory.

The UN Security Council held an emergency meeting, where US ambassador Linda Thomas-Greenfield described as "nonsense" Putin's reference to peacekeepers.

"We know what they really are," Thomas-Greenfield said, adding Putin's speech amounted to a "series of outrageous, false claims" that were aimed at "creating a pretext for war."

Russia's ambassador to the UN Vasily Nebenzya told the meeting that Moscow was still open to a diplomatic solution.

Civilians have been attending training organised for civilians by war veterans
Civilians have been attending training organised for civilians by war veterans AFP / Genya SAVILOV

"However, allowing a new bloodbath in the Donbas is something we do not intend to do," he added, referring to the region encompassing Donetsk and Lugansk.

Putn's move triggered panic on financial markets, with equities tumbling in Asian trade while the price of oil spiked.

As news of the late-night recognition hit the streets of Kyiv, many were in disbelief but said they were ready to defend their country if called on.

The eastern region of Ukraine controlled by Russia-backed separatists
The eastern region of Ukraine controlled by Russia-backed separatists AFP / Patricio ARANA

"I am very shocked," Artem Ivaschenko, a 22-year-old cook originally from Donetsk, told AFP in the capital, calling the recognition the "scariest news" he had heard since he had fled the region eight years ago.

"I live here, I already lost a part of my homeland, it was taken away, so I will protect it."

Ukraine's President Volodymyr Zelensky convened a meeting of his national security council and held telephone calls with several world leaders in a bid to shore up support.

"We expect clear support steps and effective support steps from our partners," he declared in a late night televised address, vowing that Kyiv was not afraid of anyone.

"It is very important to see now who is our true friend and partner, and who will continue to scare the Russian Federation with words," he said.

Tensions have soared between Ukraine and Russia in recent weeks
Tensions have soared between Ukraine and Russia in recent weeks AFP / Aris Messinis

"We are on our own land."

In his address, Putin repeatedly suggested Ukraine was essentially part of Russia.

He accused Kyiv of persecuting Russian speakers and of preparing a "blitzkrieg" against the breakaway regions of Donetsk and Lugansk in Ukraine's east.

"As for those who seized and hold power in Kyiv, we demand an immediate end to their military operations," Putin said.

"Otherwise, all responsibility for the possible continuation of bloodshed will be fully on the conscience of the regime in power in Ukraine."

And he made clear the stakes were bigger than Ukraine, whose efforts to join NATO and the European Union have deeply angered Moscow.

"The use of Ukraine as an instrument of confrontation with our country poses a serious, very big threat to us," Putin said.

British Prime Minister Boris Johnson called Putin's move "a flagrant violation of the sovereignty and integrity of the Ukraine", with his foreign minister promising new sanctions on Russia.

EU chiefs Ursula von der Leyen and Charles Michel vowed the bloc "will react with sanctions against those involved in this illegal act".

At the UN Security Council meeting, China called for restraint from all sides and for a diplomatic solution to the crisis.

The announcement came after weeks of tensions between Moscow and the West over Ukraine.

Russia had massed more than 150,000 troops on the borders of Ukraine, prompting warnings from the West that Russia would invade -- claims Moscow repeatedly denied.

Ukrainian officials said two soldiers and a civilian died in more shelling of frontline villages Monday.

The fear of conflict has sparked evacuations from the Ukrainian capital, with the United States late Monday saying it was sending all of its diplomats remaining in the country to Poland out of security fears.

A correspondent for France's Le Figaro daily posted video of columns of tanks, artillery, and armoured vehicles heading in the direction of the city of Donetsk.