European Council President Herman Van Rompuy says EU officials will draw up proposals for new sanctions on Russia over its action in Ukraine within a week.
He was speaking early on August 31 after a Brussels summit of EU leaders.
German Chancellor Angela Merkel told reporters that the EU would impose new sanctions if there was no change in the situation in Ukraine or if the situation worsened.
It was not clear when sanctions might actually be implemented, however.
Russia is the EU's third largest trading partner and one of its biggest oil and gas suppliers.
The United States welcomed the EU decision, saying it shows strong support for Ukraine's sovereignty and territorial integrity.
National Security Council spokeswoman Caitlin Hayden said the United States is working closely with the EU and other partners to hold Russia accountable for its actions in Ukraine.
The fighting between the Ukraine military and Russian-backed separatists in eastern Ukraine has claimed 2,600 lives, according to UN figures.
NATO estimates at least 1,000 Russian soldiers are in Ukraine. Russia denies that.
So far, Washington and Brussels have imposed sanctions against some Russian officials and companies.
Food Bans
Moscow has fired back by banning food imports.
Merkel said the new sanctions would target the same sectors as previous measures, which included an export ban on some high tech and oil exploration equipment.
Earlier in Brussels, Ukrainian President Petro Poroshenko said a strong response was needed to the "military aggression and terror" facing his country.
Lithuanian President Dalia Grybauskaite said Russia's meddling in Ukraine, meant "Russia is practically in war against Europe."
On the ground in eastern Ukraine, the Ukrainian military said it was pulling back its troops from three towns in the face of a reinvigorated rebel offensive.
Colonel Andriy Lysenko, a spokesman for the National Security Council, said troops had pulled out of Ilovaysk -- about 20 kilometers east of the rebel-held city of Donetsk -- after being surrounded by rebels there for days.
Lysenko said troops had also been ordered to retreat from Novosvitlivka and Khryashchuvate -- towns on the main road between the border with Russia and Luhansk, the second-largest rebel-held city.
Meanwhile, Moscow appears to be preparing to send a second convoy of what it says is humanitarian aid to eastern Ukraine.
Russian state TV Rossiya 24 on August 30 broadcast images of trucks from the last convoy at the border being loaded with cargo that had been delivered to the area by train.
