Ukrainian forces were visible just north of the Donetsk administrative border
The acting President of Ukraine, Olexander Turchynov, has announced the start of an "anti-terrorist operation" against pro-Russian separatists.
The operation began in the "north of Donetsk Region", he told parliament, and was being conducted "stage by stage, in a responsible... manner".
Ukrainian armoured vehicles could be seen massing on Monday as separatist militants braced for an attack.
The US and Russian presidents have discussed the crisis by telephone.
Barack Obama urged Vladimir Putin to use his influence to make separatists in Donetsk and other parts of eastern Ukraine stand down.
Mr Putin denied that Russia was intervening in the crisis.
Pro-Russian rebels have seized buildings in about 10 towns and cities across Ukraine's eastern provinces, which form the heartland of Ukraine's heavy industry.
Thousands of Russian troops are reported to be deployed along the border, kindling fears that any crackdown on the rebels could trigger an invasion.
Russia annexed the Ukrainian province of Crimea last month, after it broke away and held a controversial referendum on self-determination.
In other developments:
- Russian Finance Minister Anton Siluanov said the country's economy faced "the most difficult conditions since the 2008 crisis", with capital flight in the first quarter of this year of $63bn (£38bn; 46bn euros), because of "risks seen by the population and by investors"
- German utility company RWE AG said in a statement it had started supplying gas to Ukraine, which faces Russian cuts over unpaid bills
Mr Turchynov said the aim of the operation in Donetsk was to "protect Ukrainian citizens, to stop the terror, to stop the crime, to stop the attempts to tear our country apart".
Militant protesters gathered outside parliament in the capital Kiev to demand action against the separatists.
After days when there was little sign of the Ukrainian government exerting its authority in eastern Ukraine, Tuesday saw a very public display of force at a checkpoint just north of the Donetsk region, in the Kharkiv region, the BBC's Daniel Sandford reports.
Our correspondent saw seven armoured personnel carriers, several tracked vehicles armed with large guns, a military helicopter and dozens of Ukrainian police officers.
There were reports overnight of gun attacks on rebel checkpoints near the Donetsk town of Sloviansk, where pro-Russian militants seized a police station and a security services building at the weekend.
A police building in Kramatorsk was also seized but the militants there have reportedly now handed back control to the police.
'Tanks or talks'
Russian Foreign Minister Sergei Lavrov warned that any use of force by the Ukrainian government in the east could undermine talks on the crisis involving the EU, Russia, the US and Ukraine, which are due to be held in Geneva on Thursday.
"You can't send tanks against your own citizens and at the same time hold talks," he said on a visit to China.
But German Economy Minister Sigmar Gabriel, speaking in Berlin, said Moscow had to show it was serious about a de-escalation by pledging specific steps to ease tensions.
"If Russia is not ready to make sure the escalation finally ends, it must expect that Europe and Germany will be ready to start the third phase of sanctions," he added.
Mr Obama, the White House said in a statement, had also threatened Moscow with wider sanctions.
In a statement, the Kremlin blamed the unrest in Ukraine's south-east on the "unwillingness and inability of the leadership in Kiev to take into account the interests of Russia and the Russian-speaking population".
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