The vice premier of Crimea, home to Russia's Black Sea Fleet in Sevastopol, said a referendum on the status would take place on March 16. All state property would be "nationalized", the Russian ruble adopted and Ukrainian troops treated as occupiers and forced to surrender or leave, he said.
Russian stocks fell and the rouble weakened further after the referendum news. Moody's ratings agency said the standoff was negative for Russia's sovereign creditworthiness.
On the ground, a mission of 35 unarmed military observers from the pan-European Organisation for Security and Cooperation in Europe was stopped from entering Crimea by unidentified men in military fatigues when they travelled from the port of Odessa, Poland's defence minister said.
In Brussels, European Council President Herman Van Rompuy outlined a three-stage plan to try to resolve the crisis, while announcing the EU would sign the political parts of a far- reaching agreement with Ukraine before May 25 elections there, and offer the country extensive aid and trade benefits.
(Read more: Ukraine enlists billionaires to take on Russia)
Unless Moscow opens negotiations with Ukraine and an international "contact group" soon, the EU would move to travel bans and asset freezes on Russian officials, and boycott a planned June Group of Eight summit in the Olympic venue Sochi.
If Russia took action that destabilises Ukraine further, there would be "grave consequences" for bilateral economic ties, he said, without giving any deadlines. Poland's prime minister said the EU talks on sanctions had been "stormy", hinting at frustration at his inability to achieve stronger measures, which require a unanimous decision by all 28 member states.
The centre-right European People's Party, a grouping that includes a dozen heads of state and government in the European Union, is set to declare on Friday that Ukraine may apply for EU membership, according to a draft statement seen by Reuters. .
Putin has cited threats to Russian citizens to justify military action in Ukraine, as he did in Georgia in 2008. Far from seeking a diplomatic way out of the present crisis, Putin appears to have chosen to create facts on the ground before the West can agree on more than token action against him.
Ukrainian Prime Minister Arseny Yatseniuk said after meeting EU leaders that Ukraine's armed forces would act if Russian military intervention escalated any further into Ukrainian territory. "We are ready to protect our country," he said.
(Read more: Why Crimea matters)
Military experts say Kiev's small and underequipped forces are no match for Moscow's superpower might.
The U.S. Navy announced a guided-missile destroyer, the USS Truxton, was heading to the Black Sea in what it said was a long-planned training exercise and not a show of force
The EU said it had frozen the assets of ousted Ukrainian president Yanukovich and 17 other officials suspected of human rights violations and misuse of state funds.
International police agency Interpol said it was reviewing a request by Ukrainian authorities for it to issue a "red notice" for the arrest of Yanukovich on charges including abuse of power and murder.
As expected, the EU summit was unwilling to adopt more than symbolic measures against Russia, Europe's biggest gas supplier, because neither industrial powerhouse Germany nor financial centre Britain is keen to trigger a trade war.
France has a deal to sell warships to Russia that it is so far not prepared to cancel, London's banks have profited from facilitating Russian investment, and German companies have $22 billion invested in Russia.
The European Commission has announced aid of up to 11 billion euros ($15 billion) for Ukraine over the next couple of years provided it reaches a deal with the International Monetary Fund, entailing painful reforms like ending gas subsidies.
(Read more: Russia likely to get what Russia wants in showdown)
European Central Bank chief Mario Draghi said the crisis had already had a major impact on the Russian and Ukrainian economies, but little effect so far on the euro zone.
Russia kept the door ajar for more diplomacy on its own terms, announcing on Thursday a meeting of former Soviet states, including Ukraine, for April 4.
Lavrov said attempts by Western countries to take action over the Ukraine crisis via democracy watchdog OSCE and the NATO military alliance were not helpful.
He stuck to Putin's line - ridiculed by the West - that Moscow does not command the troops without national insignia that have taken control of Crimea, besieging Ukrainian forces, and hence cannot order them back to barracks.