It comes after a request by the leaders of Luhansk and Donetsk - areas which broke away from Kyiv's control in 2014.

There has been fighting there between pro-Russian separatists and Ukrainian pro-government forces.

And recognition by Mr Putin of Luhansk and Donetsk's independence could provide a pretext for his troops to cross the border into those areas.

The Russian leader, who earlier held a meeting of his presidential security council, is due to make a TV address shortly amid fears of an invasion of Ukraine by his forces.

Shelling has intensified along the frontline between the rebels and Ukrainian forces in eastern Ukraine and the sound of multiple blasts were heard this afternoon in the centre of the city of Donetsk.

Live updates on Ukraine crisis as satellite images reveal new Russia deployments

Meanwhile, Downing Street has warned that Mr Putin's plan for invading Ukraine has effectively "already begun".

Number 10 suggested that Russia's "playbook" for launching military action against its neighbour had begun to "play out in real time".

But a "window for diplomacy" still remains to prevent war in Europe, Downing Street added.

Russian invasion 'looks highly likely'

Foreign Secretary Liz Truss on Monday morning held talks with NATO secretary general Jens Stoltenberg in Brussels about the continuing crisis.

After their meeting, Ms Truss warned that a Russian invasion of Ukraine "looks highly likely" and the UK and NATO allies were "stepping up preparations for the worst case scenario".

The foreign secretary delivered her downbeat assessment despite Mr Putin and US President Joe Biden agreeing "in principle" to meet at a crisis summit, following a flurry of diplomatic calls over the weekend.

Putin's plan 'already begun'

Asked about Ms Truss's comments, the prime minister's official spokesman said: "That is our assessment.

"The intelligence we're seeing suggests Russia intends to launch an invasion and that President Putin's plan has already begun, in effect.

"We're seeing elements of the Russian playbook that we would expect to see in those certain situations start to play out in real time.

"We've been working with NATO allies to call that out when we see it.

"The intelligence we have suggests that they still intend to launch an invasion and we stand ready to act as needed.

"But, crucially, we still think there is a window for diplomacy - as we've seen with discussions over the weekend - and we want to explore those."

'Increase in Russian troop numbers in last 48 hours'

Defence Secretary Ben Wallace later told MPs that, as of Monday morning, there were more than 110 Russian battalion tactical groups massed around Ukraine's borders with Russia and Belarus.

There are also two amphibious groups and nine cruise missile-equipped Russian ships in the Black Sea, as well as four cruise-missile capable vessels in the Caspian Sea, Mr Wallace told the House of Commons.

"In the last 48 hours, contrary to Kremlin assurances, we have seen a continued increase in troop numbers and a change in force disposition moving from holding areas to potential launch locations," the defence secretary said.

"All the indicators point to increasing numbers and readiness of Russian forces."

He added: "Complementing this troop build-up has been the proliferation of false flag operations, propaganda stunts and Russian news outlets carrying fictitious allegations.

"These are not the actions of a Russian government fulfilling its repeated declarations that it has no intention of invading Ukraine."

Hopes over possible Putin-Biden summit

French President Emmanuel Macron has been credited with brokering the possible meeting between Mr Putin and Mr Biden in a series of phone calls on Sunday night.

US secretary of state Antony Blinken and Russian foreign minister Sergei Lavrov are due to lay the groundwork for the summit at a meeting on Thursday, which has raised hopes of a diplomatic route out of the crisis.

However, Western optimism was also likely to have been dampened by Mr Putin convening his presidential security council on Monday.

The meeting followed televised appeals by separatist leaders in eastern Ukraine for the Russian president to recognise them as independent states.

It has been speculated that Mr Putin could stage a fabricated attack by the Ukrainian military against Russian-speaking people in eastern Ukraine as a pretext for an invasion of the country.

The Russian president last week reiterated his provocative claim that the situation in Donbas - where Russian-backed rebels have been fighting Ukrainian troops since 2014 - resembled "genocide".

Russia's defence minister Sergei Shoigu told Mr Putin at Monday's meeting that Ukraine had built up serious forces near its eastern breakaway regions and may be preparing to try and take them back by force, something which Kyiv has repeatedly denied.

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Mr Shoigu accused Ukraine of stepping up shelling in the regions.

In his own remarks, Mr Putin said Mr Macron had told him Ukraine's leadership was ready to implement the Minsk peace process, which began in 2014, and was working on fresh ideas to hold elections in breakaway regions.

Russia repeats vow to retaliate against UK sanctions

Russia's ambassador to the UK said it was too soon to say whether a proposed Putin-Biden summit would be a success.

"I do believe that it's a bit early now to say what's going to happen," Andrei Kelin told the PA news agency.

Mr Kelin also reiterated Moscow's message that Russia would retaliate should the UK impose new sanctions.

UK ministers recently gained powers to impose tough new sanctions on Russian oligarchs and businesses.

But Mr Kelin said the efforts to prepare new sanctions were "a huge over-reaction to the unusual circumstances".

"We will of course find ways to respond," he added.

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Russian ratings agency ACRA estimated the country's banks imported $5bn (£3.7bn) worth of banknotes in foreign currencies in December, up from $2.65bn a year before.

This has been viewed as a pre-emptive step in case of sanctions creating increased demand, as Russians look to hold foreign currencies as a hedge against any drop in the value of the rouble or rise in inflation.

7,000 more Russian troops near border

UK government minister Paul Scully told Sky News on Monday that, despite recent claims from Moscow that Russian troops were being withdrawn from Ukraine's borders, there were 7,000 more troops in the area than there were a few days ago.

"That's why we've got to continue to be vigilant," Mr Scully said, as he warned of a "horrendous" loss of life should Mr Putin ignore diplomacy efforts.

Heavy shelling has increased in recent days along the line of contact between Ukrainian forces and Russian-backed separatist rebels in Ukraine's eastern industrial heartland of Donbas.