Cameron, speaking after a meeting of European Union heads of state in Brussels, said the EU had agreed to suspend negotiations on easing visa rules for Russians in response to President Vladimir Putin's intervention in Ukraine.
"What has happened with respect to the Crimea is unacceptable and there can be no business as usual with Russia," Cameron told reporters.
He said the EU could move "relatively quickly" to asset freezes and travel bans unless Russia made progress in talks with Ukraine.
"If the talks don't get under way and if the talks don't make rapid progress, then we move to the second stage which is asset freezes and travel bans and that again could happen relatively quickly if progress isn't made," he said.
He said that if Russia went further into Ukraine or attempted to further destabilise its neighbour, there would be far-reaching economic consequences for Russia.