NATO defence ministers agreed Tuesday series of steps to bolster protection in eastern Europe after the Ukraine crisis, but insisted they were acting within the limits of a key post-Cold War treaty with Moscow.

NATO head Anders Fogh Rasmussen said ministers had agreed to develop a "readiness action plan... to respond to the changed security environment" created by the escalating conflict in Ukraine.

This will include measures such as pre-positioning supplies and equipment in member states and stepping up work to improve military capabilities to help NATO speed up its reaction time to any threat.

The plan will go to NATO leaders at their September summit in Britain for approval.

The decision comes after Moscow's annexation of Crimea and support for pro-Russian separatists in the east of Ukraine has plunged East-West relations to their worst point since the end of the Cold War.

Russia's intervention in Ukraine and its annexation of Crimea mean it "is in blatant breach of the 1997 Founding Act," Rasmussen said.

The 1997 NATO-Russia Founding Act formalised post-Cold War borders in Europe and crucially said neither the West, led by the United States, nor Russia would deploy forces or arms in the newly-freed east European countries in a threatening manner.

Both sides also agreed that neither should treat the other as an "adversary," aiming to reduce the risk of future conflict.

Russia's ambassador to NATO, Alexander Grush, said Monday that NATO'S temporary deployment of additional alliance planes and troops in member states such as Poland and the Baltic countries amounted to a breach of the treaty.

Some NATO member states, especially in central and eastern Europe, have expressed concern and surprise at Russia's ability to mass 40,000 troops on the border with Ukraine very quickly and keep them there, ready for action, for some time.

Rasmussen said NATO had to take necessary measures for "as long as necessary" to counter a new threat.

He pointed out that Russia had increased defence spending by 50 percent over the last five years, while the allies have cut theirs by a fifth.

In this vein, he warmly welcomed President Barack Obama's announcement of a $1 billion US security plan for eastern Europe aimed at reassuring NATO allies and friends, who have been increasingly concerned by Russian actions.

Still, NATO and the West will stick with the treaty because they "want a rules-based security system" and "believe all the measures we are prepared to take can be taken within the existing" rules, Rasmussen said.

While taking a hard line on Moscow, he also rejected suggestions that the Ukraine crisis had sparked a new Cold War, saying there the deep ideological and global divide created by the conflict, which lasted nearly 50 years, had dissolved.

Russia now seems "quite isolated," he said, but its more "assertive attitude... reminds of the old-fashioned Cold-War thinking."