Kiev, Ukraine (CNN) -- A top Ukrainian army officer said a "full-scale invasion" of his country was under way Thursday, as a U.S. official said up to 1,000 Russian troops had crossed Ukraine's southern border to fight alongside pro-Russian rebels.
U.S. officials said Russian troops were directly involved in the latest fighting, despite Moscow's denials.
Rebels backed by Russian tanks and armored personnel carriers fought Ukrainian forces on two fronts Thursday: southeast of rebel-held Donetsk, and along the nation's southern coast in the town of Novoazovsk, about 12 miles (20 kilometers) from the Russian border, said Mykhailo Lysenko, the deputy commander of the Ukrainian Donbas battalion.
"This is a full-scale invasion," Lysenko said, referring to the fighting in the south.
Intelligence now indicates that up to 1,000 Russian troops have moved into southern Ukraine with heavy weapons and are fighting there, a U.S. official told CNN on Thursday.
NATO provided what it said is evidence: satellite images showing Russian troops engaged in military operations inside Ukraine.
"The images, captured in late August, depict Russian self-propelled artillery units moving in a convoy through the Ukrainian countryside and then preparing for action by establishing firing positions in the area of Krasnodon, Ukraine," NATO said in a news release.
Commercial satellite imagery shows the same, according to a British security source with detailed knowledge of UK intelligence estimates. One image that British intelligence has analyzed, dated Tuesday, shows 15 heavy trucks, at least seven armored vehicles and at least nine artillery positions.
Russia's military actions in eastern Ukraine "must cease immediately," British Prime Minister David Cameron said Thursday.
"I'm extremely concerned by mounting evidence that Russian troops have made large-scale incursions into South Eastern Ukraine, completely disregarding the sovereignty of a neighbor," Cameron said. "The international community has already warned Russia that such provocative actions would be completely unacceptable and illegal."
As the Russian presence grows, so does its influence over the separatist leadership in Ukraine, the British security source told CNN.
According to the source, the UK has determined that Russian artillery and rockets -- across the border and from within Ukraine -- have been fired against the Ukrainian military.
Two SA-22A gun/missile air defense systems were observed in separatist-controlled parts of Luhansk province on August 2, the source said. This system is not in Ukraine's inventory but is used by the Russian military.
Ukraine's National Defense and Security Council said that Russian forces were in full control of Novoazovsk as of Wednesday afternoon.
Russia's military fired Grad rockets into the town and its suburbs before sending in two convoys of tanks and armored personnel carriers from Russia's Rostov region, it said in a statement
"Ukrainian troops were ordered to pull out to save their lives. By late afternoon both Russian convoys had entered the town. Ukraine is now fortifying nearby Mariupol to the west," the NDSC said.
A number of villages in the Novoazovsk, Starobeshiv and Amvrosiiv districts were also seized, it said.
The NDSC also warned that a rebel counterattack is expected in the area where Malaysia Airlines Flight 17 was shot down in July. Ukrainian and Western officials say they believe it was downed by rebels armed with Russian-made weapons.
Novoazovsk is strategically important because it lies on the main road leading from the Russian border to Ukraine's Crimea region, which Russia annexed in March. Separatist leaders in the Donetsk and Luhansk regions then declared independence from Kiev.
U.N. Security Council meets
As international concern mounted over the apparent escalation in fighting, the U.N. Security Council held an emergency meeting on Ukraine.
Samantha Power, the U.S. ambassador to the United Nations, accused Russia of lying.
"It has manipulated. It has obfuscated. It has outright lied. So we have learned to measure Russia by its actions and not by its words," Power said, calling for "serious negotiations."
"In the face of this threat, the cost of inaction is unacceptable," she warned.
According to Vitaly Churkin, Russia's ambassador to the United Nations, more than 2,000 people have been killed in the conflict and more than 800,000 have been displaced.
He blamed the current escalation on the "reckless policy" of Kiev.
"The Kiev authorities have torpedoed all political agreements on resolving the crisis," Churkin told the Security Council meeting. "The only thing we're seeing is a fight against dissent."
Ukraine's deputy ambassador to the United Nations, meanwhile, put his colleagues on alert.
"The world is challenged by a military-nuclear might, ignoring universal principles and craving absolute power," Oleksandr Pavlichenko said about Russia. "How many more red lines have to be crossed before this challenge is addressed?" he asked.
The latest flare-up comes despite a meeting between Ukrainian President Petro Poroshenko and Russian President Vladimir Putin in Belarus on Tuesday at which some progress appeared to have been made toward finding a diplomatic solution to the crisis.
Poroshenko canceled a planned trip to Turkey on Thursday "due to sharp aggravation of the situation in Donetsk region ... as Russian troops were brought into Ukraine," a statement from his office said.
In a Cabinet meeting, Ukrainian Prime Minister Arseniy Yatsenyuk said that Russia "has very much increased its military presence in Ukraine" and that tougher measures may be needed to curb Russia's support for the rebels.
"Unfortunately, the sanctions were unhelpful as to de-escalating the situation in Ukraine," he said, referring to the economic sanctions imposed by the United States and European Union against Russian individuals and companies.
Yatsenyuk suggested one way to halt "Russian aggression" could be to freeze all assets and ban all Russian bank transactions until Russia "pulls out all its military, equipment and agents" from Ukraine.
"Vladimir Putin has purposely started a war in Europe. It is impossible to hide from the fact," he said.
President Barack Obama, similarly, placed blame for the violence in Ukraine on Russia.
"The violence is encouraged by Russia. The separatists are trained by Russia; they are armed by Russia; they are funded by Russia," he told reporters in Washington.
Calling sanctions against Russia already in place "effective," he said it would face additional costs and consequences for its ongoing incursion.
"Russia is already more isolated than at any time since the end of the Cold War," Obama said.
U.N. Secretary General Ban Ki-moon said the flow of weapons is hindering efforts.
"This remains a key obstacle to the de-escalation of the situation on the ground, as arms and heavy weaponry reportedly continue to flow unabated into Ukraine from Russia," Ban said. "There is an urgent need to ensure a secure border between the two countries, with international verification."
U.S. ambassador: Russia is directly involved
U.S. Ambassador to Ukraine Geoffrey Pyatt also said Thursday that Russian soldiers were directly involved in the fighting, alongside the pro-Russian rebels.
"Russian-supplied tanks, armored vehicles, artillery and multiple rocket launchers have been insufficient to defeat Ukraine's armed forces, so now an increasing number of Russian troops are intervening directly in the fighting on Ukrainian territory," he said on Twitter.
"Russia has also sent its newest air defense systems including the SA-22 into eastern Ukraine and is now directly involved in the fighting."
Moscow denies supporting and arming the pro-Russian rebels. It has also repeatedly denied allegations by Kiev that it has sent troops over the border.
A Russian senator and the deputy head of the Committee on Defense and Security in Russia's upper house of Parliament, Evgeny Serebrennikov, dismissed the latest reports of a Russian incursion as untrue.
"We've heard many statements from the government of Ukraine, which turned out to be a lie. What we can see now is just another lie," he said to Russian state news agency RIA Novosti.
Russian lawmaker Leonid Slutsky also accused Kiev of lies, in comments to RIA Novosti.
"I can only say that there's no ground for claims like this, and the junta tries to lay its own fault at someone else's door," he said, referring to the Kiev government.
Moscow regards it as illegitimate because it took charge after Ukraine's pro-Russian President Viktor Yanukovych was ousted in February.
Rebel leader: 3,000 to 4,000 Russians in our ranks
However, the Prime Minister of the self-declared Donetsk People's Republic, Alexander Zakharchenko, acknowledged Thursday that there are current Russian servicemen fighting in the rebels' ranks in eastern Ukraine.
In his statement, televised on state-run Russia 24, Zakharchenko said the rebels have never concealed that many Russians are fighting with them. He said up until now there were 3,000 to 4,000 volunteers, some of whom are retired Russian servicemen.
Zakharchenko went on to reveal that the Russian servicemen currently fighting in their ranks are active, "as they came to us to struggle for our freedom instead of their vacations."
On Tuesday, Ukraine's Security Service said it had detained 10 Russian soldiers in Ukraine.
Russian state media cited a source in the Russian Defense Ministry as saying the soldiers had been patrolling the border and "most likely crossed by accident" at an unmarked point.
The NDSC said Thursday that Ukraine's Security Service detained another Russian serviceman who testified that his unit was supplying heavy military equipment to militants.
Separately, Ukraine announced Thursday that it would reinstate compulsory military service in the fall. Fresh recruits will not be sent to the country's area of conflict in the east, Mihaylo Koval, the deputy secretary of the National Defense and Security Council, told reporters.
Ukrainian volunteers retreat from Mariupol area
Pro-Kiev forces apparently already have engaged with rebel forces between Novoazovsk and Mariupol, the Sea of Azov port city 35 kilometers (22 miles) to the west that the country's security council said was being fortified.
A CNN crew north of Mariupol saw a ragged convoy of about 25 vehicles, some with their windows smashed out, belonging to pro-Kiev volunteer fighters heading away from the city Thursday afternoon.
The volunteers, including two from the country of Georgia, said they'd been involved in fighting in the Mariupol area but didn't provide details.
Earlier Thursday and farther north, the CNN crew was near Donetsk city, which Ukrainian forces have been trying to wrest from rebels for weeks. Heavy Ukrainian artillery fire targeted areas near Donetsk's southern suburbs amid a heavy downpour of rain.
The main highway 9 miles (15 kilometers) south of Donetsk was deserted. With return fire coming from Donetsk, villagers in the area said they'd been taking shelter indoors or underground, coming out only for an hour or two a day to get supplies.
The city of Luhansk, a rebel stronghold, has also been at the center of fighting for days, prompting a humanitarian crisis. The NDSC said it remained without water, power or phone connections Thursday.
Journalist Victoria Butenko reported from Kiev and CNN's Diana Magnay from eastern Ukraine, while Laura Smith-Spark wrote and reported in London. CNN's Susannah Palk, Max Foster, Tim Lister, Alla Eshchenko and Ariana Williams contributed to this report.