The international community must make clear to Russia there are "costs and consequences" from its actions in Crimea, shadow foreign secretary Douglas Alexander has said.
Mr Alexander spoke out the day after Prime Minister David Cameron warned Russia faced international isolation and tighter sanctions unless Moscow takes steps to de-escalate the crisis in Ukraine.
Mr Cameron said yesterday that the European Union had agreed a range of measures in response to Moscow's annexation of Crimea, including trade restrictions.
Today Mr Alexander condemned the " invasion, occupation and annexation of a sovereign European country by the Russian Federation".
And he said "deft and skilled diplomacy" would be required to bring about a de-escalation of the crisis.
But he warned a failure to act would leave Moscow "emboldened" and other central European nations "increasingly frightened" for their future.
"None of us should be in any doubt this represents probably the greatest single security threat on the European continent for the last two decades," Mr Alexander said.
"We should have no illusions that this crisis is yet over, there is going to be a need for deft and skilled diplomacy in the coming weeks if we are going to see the de-escalation all of us want to see."
The shadow foreign secretary, speaking at the Scottish Labour conference in Perth, said Russian president Vladimir Putin "is acting out of weakness, not out of strength".
Mr Alexander stated: " We need to send a clear signal that there are costs and consequences for Russia actions. Let's remember he invaded Georgia in 2008, he's now invaded Crimea in 2014. If you are talking to people in Moldova, outside of Nato, they are deeply worried as to what the future holds.
"Unless we act together as an international community we will see Russia emboldened, we will see central Europe increasingly frightened and anxious as to whether the security guarantee they enjoy will hold."
Mr Cameron and other EU leaders signed an agreement with Ukraine, which aligns the new administration in Kiev more firmly with Europe.
The move follows the EU's decision to expand its blacklist of Russian officials and politicians subject to travel bans and asset freezes by 12 names to reach a total of 33, in retaliation for Russia's annexation of the Ukrainian region of Crimea.
Mr Cameron said yesterday the European Commission had been charged with drawing up further sanctions against Russia if there were any further attempts to destabilise Ukraine, promising they would have ''far-reaching economic consequences''.