President Putin, who’s currently speaking at a news conference, has said there’s no need to send troops into Ukraine now, but that Russia still "has that option".
Deploying armed forces is, he said, would only be done in an extreme case.
"So the tense situation in Crimea related to the possibility of use of force has been exhausted. There is no need for that."
His words follow reports this morning that Russian troops are being pulled out of Crimea, and after Russia’s UN envoy said Yanukovich had asked for troops from Russia.
Putin said the military exercises going on round the Ukrainian border were pre-planned, and that there are lots of uniforms in post-soviet countries that look like Russian ones.
Russian forces haven't taken part in operations in Crimea, he said, nor is the country thinking of annexing the region.
Kiev - an armed seizure of power
He’s called events in Kiev tantamount to an unconstitutional coup - an armed seizure of power.
While he understands calls for radical change in Ukraine, the Russian president stressed that Yanukovich agreed to everything demanded by the opposition, but stood no chance of re-election.
He’s labelled Ukraine’s parliament “partially legitimate”, but not other parties and certainly not acting President Oleksandr Turchynov.
When asked if Russia will recognised the president elected in Ukraine's May elections, Putin said not if it happens "amid the terror" currently gripping Kiev.
"There are only three legal ways of removing the president, and those are death, personal resignation, or impeachment."
Update: The Russian president has said that there is no political future for former president Yanukovich. He said Russia took him out of Ukraine for humanitarian reasons: "Death is the simplest way to get rid of a legitimate president and I think they would have just killed him."
Threats of sanctions from the West are counterproductive, Putin told the conference, adding that Russia's acted in line with international law.
Earlier, Kremlin adviser Sergei Glazyev has said that US sanctions on Russia could see Moscow drop the dollar as a reserve currency and refuse to pay off loans to US banks. He warned that the US financial system would face a "crash", should this happen. If accounts were frozen, he added, Moscow would recommend holders of US treasuries sell them.
Yesterday was a bad day for several stock markets, with Russia's Micex trumping the lot with a 10.8 per cent fall.
But according to Putin, present volatility is temporary.
Moreover, the fears prompting sell-offs were predominantly down to the Fed and flight from emerging markets, he said, adding the political unrest in Ukraine had just some impact.