Ukraine’s parliament is to decide whether to bring in martial law as anger over the capture of three of its naval vessels by Russia spilled into the streets overnight.
Protesters gathered outside the Russian embassy in the capital Kiev and an embassy car was set on fire.
The incident, in waters off the Crimean Peninsula, marks a major escalation of tension between the two countries.
The UN Security Council will hold an emergency meeting as a result.
Each country blames the other for the incident in which two gunboats and a tug were captured and a number of Ukrainian crew members injured.
There have been growing tensions between the two sides over access to the Black Sea and the Sea of Azov off the Crimean peninsula – annexed by Russia in 2014.
Ukrainian forces have been fighting Russian-backed separatists in the east of the country – but this is the first time the two militaries have come into open conflict in recent years.
How did the latest crisis unfold?
It began when Russia accused the Ukrainian ships of illegally entering its waters.
On Sunday morning, Ukraine’s Berdyansk and Nikopol gunboats, and the Yana Kapa tug, tried to sail from the Black Sea port of Odessa to Mariupol in the Sea of Azov, which is shared between the two countries.
Ukraine says the Russians tried to intercept the ships, ramming the tug.
The vessels continued towards the Kerch Strait, the only access to the Sea of Azov, but were blocked by a tanker placed under the Kerch bridge.
Russia built the bridge, that links mainland Russia to Crimea, earlier this year, despite opposition from Ukraine.
On Sunday, Russia also scrambled two fighter jets and two helicopters to the area. It accused the ships of illegally entering its waters and said traffic had been suspended for security reasons.
The Ukrainian navy later said the boats had been hit and disabled as they tried to leave the area. It said six crew members had been injured.
Russia’s FSB security service later confirmed that one of its patrol boats had used force to seize the three Ukrainian vessels but said only three sailors had been wounded.
Ukraine said it had informed the Russians of its plan to move its ships through the sea to Mariupol.
Analysis by Steven Rosenberg, BBC News, Moscow
Tension between Russia and Ukraine has been building for months off Crimea.
Under a 2003 treaty between the governments in Moscow and Kiev, the Kerch Strait and the Sea of Azov are shared territorial waters.
But recently there, Russia began inspecting all vessels sailing to or from Ukrainian ports.
The use of force by Russia to seize Ukrainian vessels – with casualties – is a major escalation. But you won’t hear Moscow taking the blame.
Under President Vladimir Putin, when Russia has used force before, its line of defence has always been: “We didn’t start it.” That goes for the Russia-Georgia War of 2008, and the appearance of “Little Green Men” (Russian special forces) in Crimea in 2014, which preceded Moscow’s annexation of the peninsula.
So, expect Moscow to pin the blame for what happened on Sunday and for whatever happens next on President Petro Poroshenko’s government.
What has the reaction been?
The standoff has been met with anger in Ukraine.
Late on Sunday, about 150 people gathered outside the Russian embassy in Kiev, some throwing flares. At least one car belonging to the embassy was set alight.
“We gathered here today to protest against Russians over their actions today, over shooting of our military,” Oleksiy Ryabov told Reuters news agency.
“We are very angry. We should have severed all diplomatic relations with this country a long time ago.”
During a meeting of Ukraine’s National Security and Defence Council, President Poroshenko described the Russian actions as “unprovoked and crazy”.
He said he would ask parliament on Monday to introduce martial law but stressed that this did not mean a “declaration of war.
“Ukraine does not plan to fight anyone,” he said.
Martial law could give the government the power to introduce widespread compulsory military service, restrict public demonstrations, and suspend elections, local media report.
The Ukrainian defence ministry announced that orders had been given to put the military on full combat alert.
Meanwhile, Nato and the EU have both issued statements calling on Russia to allow access to the Kerch strait.
The EU said: “We expect Russia to restore freedom of passage at the Kerch strait and urge all to act with utmost restraint to de-escalate the situation immediately.”
It added that Russia’s construction of the Kerch Bridge was a “violation of Ukraine’s sovereignty and territorial integrity.”
Why is the Sea of Azov a flashpoint?
The shallow Sea of Azov lies east of Crimea, and south of the Ukrainian regions partially seized by pro-Russian separatists.
The two Ukrainian ports on its northern shore – Berdyansk and Mariupol – are key to exporting grain and products such as steel, as well as for importing coal.
Earlier this month, the EU warned it would take “targeted measures” to address the fact Russia has been inspecting ships going to or from Ukrainian ports – despite the existing treaty guaranteeing freedom of navigation.
The inspections began soon after Ukraine detained a fishing vessel from Crimea in March. Moscow says they are necessary for security reasons, pointing to a potential threat to the bridge from Ukrainian radicals.
More than 10,000 people have been killed in the eastern Donetsk and Luhansk regions since separatists moved against the Ukrainian state in April 2014.
Ukraine and the West accuse Russia of sending its troops to the region and arming the separatists.
Moscow denies this but says that Russian volunteers are helping the rebels.