Damage to the British economy resulting from trade sanctions on Russia over the Ukraine crisis would be a "price worth paying," William Hague has said.
The UK foreign secretary said the EU, US and allies planned further travel bans and asset freezes against Moscow as punishment for "bullying" behaviour.
But he warned that "more far reaching measures" were being prepared.
EU diplomats revealed they will meet on Monday to discuss new sanctions against Russia.
Earlier, the G7 group of economic powers agreed to intensify sanctions.
The West accuses Russia of leading a secessionist revolt in Ukraine's east after it annexed Crimea last month. Moscow denies the allegations.
Rebel militia continue to occupy official buildings in a dozen eastern cities, defying the Ukrainian government in Kiev.
Russia has tens of thousands of troops deployed along its side of the border with Ukraine and has said it would act if its interests were threatened.
US president Barack Obama has accused Russian President Vladimir Putin of failing to "lift a finger" to persuade pro-Russian militants to comply with the Geneva deal intended to defuse the situation.
"In fact, there's strong evidence that they've been encouraging the activities in eastern and southern Ukraine," Mr Obama said on a visit to Malaysia.
Speaking on Sky News, Mr Hague said discussions were still going on but there was "likely to be an extension of existing sanctions, of the travel bans and asset freezes on individuals".
"The more names we add to that list the more they do bite in the Russian economy," he said.
"But we are also working on more far reaching measures of economic, trade and financial sanctions.
"Of course we have always hoped... that we don't have to go ahead with those things.
"We want world trade to expand and improve. But we will go ahead with them if necessary, if Russia continues to escalate this crisis.
"We will calculate them in a way that has the maximum effect on the Russian economy and the minimum effect on our own economies in the EU."
Asked about possible damage to the British economy, he said: "It would be a price worth paying if this situation continues to deteriorate - yes it would.
"The European Commission has done a lot of work on this already so that all European nations would share in the sacrifices that would be involved.
"There would be some price to pay for this country and our allies of such measures.
"But there is a huge price to pay for allowing aggressive bullying behaviour to continue, for a European nation invading another European nation as has already happened in Crimea, breaking all aspects of international law in that regard.
"History teaches us that we have to stand up to such bullying behaviour from one state on to another."
Mr Hague pointed out that there had already been significant "capital flight" from Russia and falls in the country's stock markets.
"Of course what Russia really has to worry about here, even if they pretend not to be concerned about these sanctions, is the long-term effect on the Russian economy of this whole situation," he said.
"No-one should underestimate the impact on Russia and Russia's own interests of continued escalation of this crisis."