Vladimir Putin has ordered Russia's military to put its deterrence forces, which include nuclear weapons, on "special alert".
He told defence chiefs it was because of "aggressive statements" by the West, amid widespread condemnation of his invasion of Ukraine.
The announcement does not mean Russia intends to use the weapons.
The US immediately condemned his decision calling it an "unacceptable escalation".
Last week, Mr Putin had warned that "whoever tries to hinder us" in Ukraine would see consequences "you have never seen in your history".
Those words were widely interpreted as signalling a threat to use nuclear weapons if the West stood in his way.
That warning became sharper on Sunday when he ordered the Russian defence minister and the chief of the military's general staff to put the nuclear deterrent forces on a "special regime of combat duty".
After Mr Putin's announcement, the EU announced an unprecedented new raft of sanctions and actions against Russia, including:
- The financing of weapons for Ukraine
- A total ban on Russian planes using EU airspace
- Barring state media outlets Sputnik and Russia Today from EU territory.
These measures come on top of other sanctions already imposed by Western nations, which include asset freezes on major banks and wealthy individuals, including Mr Putin himself.
The US ambassador to the United Nations said Mr Putin's nuclear deterrent order showed he was escalating the Ukraine conflict in an unacceptable manner.
The White House said Russia had not been under threat from Nato at any point, while Nato Secretary General Jens Stoltenberg described Mr Putin's comments as "dangerous rhetoric".
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Meanwhile, the Ukrainian presidency says it has agreed to hold negotiations with Russia at a location on the border between Ukraine and Belarus.
President Volodymyr Zelensky said that in a conversation with Belarusian leader Alexander Lukashenko, the Ukrainian side had agreed to meet the Russians without preconditions on the Ukrainian-Belarusian border, near the Pripyat River.
Mr Zelensky said Mr Lukashenko had taken responsibility for ensuring that all planes, helicopters and missiles stationed on Belarusian territory remained on the ground during the Ukrainian delegation's travel, talks and return.
Neither Russia nor Belarus have issued any statements about potential talks.
Russia's defence ministry has now acknowledged that its military personnel have been killed and wounded in Ukraine, though it claims the losses are much less than those of Ukraine.
The UN said that by Saturday, at least 134 Ukrainian military had been killed. Ukraine, meanwhile, says there have been 4,300 casualties among Russian servicemen, but even Ukrainian officials say those figures are not clear.
Ukraine's human rights commissioner says 210 civilians have been killed.
Among the dead are children - one when a children's hospital was shelled in Kyiv and one in a Russian attack on a kindergarten that claimed six lives near the northern border at Okhtyrka.
Nine civilians have been killed in Kyiv, while 10 ethnic Greek Ukrainians died in air strikes on villages in the south-east, Greek officials say.
So far, the UN has recorded 64 confirmed civilian deaths and many more wounded, and it expects the true number to be much higher.
In other developments, as the Russian invasion entered its fourth day:
- Thousands of Ukrainians travelled towards neighbouring countries to escape the war, with UN estimating refugee numbers have reached 368,000 and rising
- Russian airliners turned round in mid-air as dozens of European nations banned flights from the country amid rising pressure on Moscow
- Russian police have detained more than 900 people protesting against the invasion of Ukraine in widespread protests on Sunday, according to an independent monitoring group
- The governor of Kharkiv says Ukrainian forces have reasserted full control over Ukraine's second city, as residents describe a barrage of shelling
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