Russian (right) and Crimean flags flutter on top of the Crimean government building near a statue of Vladimir Lenin in Simferopol, Ukraine on Tuesday. Photo: AFP

Related daily special: Ukraine crisis: Timeline and reactions

President Vladimir Putin said Tuesday that Russia reserved the right to use all options in Ukraine to protect compatriots living in "terror" but that Moscow would use force only as a last resort.

Breaking his silence on events in Ukraine since the removal of Russian-backed President Viktor Yanukovych, Putin skirted questions about Russian servicemen taking control of the Crimea region, saying armed men who seized buildings were local forces.

Asked if Russian forces took part in operations in Crimea he said, "No, they did not participate," adding "There are lots of uniforms that look similar," AFP reported.

But Ukraine's new authorities have said that several thousand Russian troops have poured into Crimea over the last days, in claims backed by Western officials.

"As for bringing in forces, for now there is no such need but such a possibility exists," Putin said. "It would naturally be the last resort, absolutely the last."

Putin said that there had been an "unconstitutional coup" in Ukraine and Yanukovych was still the legitimate leader of the country, however, he admitted that the ousted president already has no "political future."

"The ideal outcome that Russia wants in the Ukraine crisis is the resignation of the pro-West interim government in Kiev and a Russia-backed government in power," Li Haidong, a professor with the Institute of International Relations at China Foreign Affairs University, told the Global Times.

"The bottom line for Russia is to keep its control over Crimea," said Li, however, if Ukraine's interim government insists on turning the country toward the West, Russia sending troops into eastern Ukraine could not be ruled out.

The US and its European allies have threatened to take economic and diplomatic sanctions to isolate Moscow as a response to Russia's incursion into Crimea and canceled preparations for the G8 summit due to be held in Sochi in June.

US Secretary of State John Kerry arrived in Kiev Tuesday for talks with Ukraine's new interim government. His visit came as the US said it would provide $1 billion to financially-stricken Ukraine as part of an international loan.

US officials said Moscow could face sanctions within days. The US has suspended defense cooperation with Russia, the Pentagon said Monday. The suspension covers "exercises, bilateral meetings, port visits and planning conferences.

A Kremlin aide was quoted by RIA news agency on Tuesday as saying that if the US were to impose sanctions on Russia over Ukraine, Moscow might be forced to drop the dollar as a reserve currency and refuse to pay off any loans to US banks.

Measures such as suspension of military cooperation, economic sanctions or diplomatic isolation would not affect Russia's determination as Ukraine concerns its core national interests, Li noted.

During a phone call with Putin, Chinese President Xi Jinping on Tuesday said that the current situation in Ukraine is accidental but also inevitable.

Xi told the Russian president that China believes that Russia can coordinate with all sides to push for a political solution in Ukraine and maintain the peace of the region and world.

Shi Yinhong, a professor with the Renmin University of China, told the Global Times that maintaining strategic ties with Russia and insisting on China's principle of non-interference are both interests China should protect.

"It is wise for China to keep a neutral stance over Ukraine," said Shi.

Agencies contributed to this story