UN Secretary General Ban Ki-moon warned Western powers Tuesday "there is no military solution" to the Ukraine crisis, as NATO prepares to upgrade its combat readiness in eastern Europe.

Ban said he was greatly concerned at developments in Ukraine and wanted to avoid further deterioration in a crisis "that has been developing into a very chaotic and dangerous situation".

"It has regional and even global implications," he told reporters during a visit to New Zealand.

"That is why I have been reaching out to Ukrainian and Russian authorities, the highest authorities, to address this issue and sit down together and resolve it peacefully through dialogue."

Ban acknowledged Western concerns about gains in eastern Ukraine by pro-Russian insurgents, who Kiev says are backed by Russian forces but Moscow insists are separatist rebels.

"I know the European Union, the Americans and most of the Western countries are discussing very seriously among themselves how to handle this matter," he said.

"What is important at this time is that they should know there is no military solution in this. There should be a political dialogue for a political solution, that is the more sustainable way."

His remarks come as NATO prepares for a summit in Wales this week where is it set to bolster its capability in eastern European member states spooked by Russia's actions in Ukraine.

The summit will boost NATO's rapid response force, creating a spearhead of several thousand troops which can deploy within days to regional hotspots, NATO chief Anders Fogh Rasmussen said Monday.

A UN report last week estimated nearly 2,600 people had been killed since the conflict erupted in eastern Ukraine in mid-April, with about 430,000 people fleeing their homes.

The United States and the European Union have imposed a series of sanctions on Russia over the Ukraine crisis, the worst standoff between Moscow and the West since the Cold War.

NATO and Russia's thorny relations
Brussels (AFP) Sept 02, 2014 - Relations between NATO and its former Cold War foe Russia have been difficult and often strained since the collapse of the Soviet Union and the dissolution of its equivalent Warsaw Pact military alliance in 1991.

Below are some key bones of contention:

- EASTERN ENLARGEMENT (1999 and 2004): A member of NATO's Partnership for Peace programme since 1994, Russia described as "an historic error" NATO's eastern enlargement, but effectively gave a reluctant green light when on May 27, 1997, it signed the Founding Act, a treaty with NATO countries recognising post-Cold War borders.

On March 12, 1999 NATO admitted three former Warsaw Pact countries -- the Czech Republic, Hungary and Poland. Moscow then warned NATO against admitting a former Soviet republic.

Nevertheless, on March 29, 2004, NATO opened its doors to the three Baltic former Soviet republics of Estonia, Latvia and Lithuania, along with Bulgaria, Romania, Slovakia and Slovenia.

In April 2008, NATO went even further, opening up the prospect of membership in the long term for Ukraine and Georgia. Ukraine ruled out that option in 2010 but Premier Arseniy Yatsenyuk said Friday he would ask parliament to endorse a membership bid as the crisis deepened.

THE KOSOVO CONFLICT (1998-1999): In 1998, Moscow, the traditional ally of Serbia, threatened "a return of the Cold War" if NATO forced the Serbs to withdraw from the mainly ethnic-Albanian province of Kosovo.

On March 26, 1999, two days after NATO's first air strikes, Russia closed a NATO information office in Moscow and froze military cooperation. NATO and Russia on December 15, 2000 agreed to reopen the office.

Tensions resurfaced on Kosovo's February 17, 2008, declaration of independence, with Moscow denouncing a "precedent" encouraged by the West to change international borders unilaterally.

- CFE TREATY (2007): On December 12, 2007, Russia suspended a key Soviet-era arms pact, the Treaty on Conventional Armed Forces in Europe (CFE). It said this was due to NATO's failure to ratify the amended 1999 version by claiming that the Russian troop presence Georgia and Moldova violated the treaty, a charge Moscow rejected.

- THE RUSSIA-GEORGIA CONFLICT (2008): On August 19, 2008 after the brief war between Russia and Georgia, NATO called on Russia to withdraw its forces from the former Soviet republic. It froze relations until the following June, suspending the NATO-Russia Council created in 2002.

Moscow then suspended its military cooperation with NATO and accused the alliance of having provoked the conflict.

In May, 2009, NATO went ahead with military manoeuvres in Georgia, while a new security document unveiled by the Kremlin said Moscow viewed the United States and NATO as major threats.

- SPYING (2009): In late April, 2009, NATO expelled two Russian diplomats in retaliation for a spy scandal in which a former Estonian official, Hermann Simm, passed secrets to Moscow.

Moscow responded by expelling two Canadian diplomats from NATO's information office in Moscow and pulled out of a meeting of the NATO-Russia Council planned for late May, which had been intended to put the two sides back on good terms after the Georgian crisis.

- THE MISSILE SHIELD (since 2010): Launched in 2010, plans for a European missile shield project based on US technology, will see the progressive deployment of missile interceptors and powerful radars in Poland and Romania.

The project -- said to be aimed at countering a potential Iran threat -- has drawn opposition from Russia, which fears it could compromise its security and it deployed missiles in its Kaliningrad enclave in December 2013.

- LIBYA (2011): A permanent member of the UN's Security Council, Moscow abstained during a vote on Libya in March 2011 which opened the way for NATO air strikes on the forces of strongman Moamer Kadhafi, which led to the fall of the regime. In April Russia accused NATO of going beyond the UN mandate.

- UKRAINE (2014): The Ukrainian crisis is considered the most serious for relations between NATO and Russia since the collapse of the Soviet Union.

After Russia annexed Crimea on March 18, NATO suspended its civilian and military cooperation with Moscow which in turn mocked the alliance's Cold War "instincts".

In late August, NATO said "well over a thousand" Russian troops were operating inside Ukraine, supported by tanks and heavy equipment.