At the leaders' first meeting since June, Ukrainian President Petro Poroshenko replied by demanding a halt to arms shipments from Russia to the separatist fighters.
The pair shook hands at the start of talks in the Belarussian capital Minsk, only hours after Kiev said it had captured Russian soldiers on a "special mission" on Ukrainian territory.
Responding to a video of the detained servicemen, a Russian defence ministry source said they had crossed the border by mistake.
Moscow has long denied charges by Kiev it has been sending weapons and fighters to help the separatists in eastern Ukraine. America and the European Union have backed Kiev by imposing sanctions on Moscow in a stand-off that has prompted Russia and Nato to step up military manoeuvres.
Mr Putin said: "We are convinced that today, (the Ukraine crisis) cannot be solved by further escalation of the military scenario without taking into account vital interests of the southeastern regions of the country and without a peaceful dialogue with its representatives."
Mr Poroshenko responded by defending a peace plan he issued in June, when the rebels in the southeast Donbass region scorned his invitation to lay down their arms and leave by a safe corridor.
The Ukrainian leader said: "The prime condition for a stabilisation of the situation is the establishment of effective control over the Russian-Ukrainian border. It is vital to do everything to stop deliveries of equipment and arms to the fighters."
Earlier yesterday, a day after announcing it had detained 10 Russian paratroopers who crossed the border in a column of armed infantry vehicles, Ukraine released film of the captive soldiers.
One of them, who identified himself as Ivan Milchakov, listed his personal details, including the name of his paratroop regiment, which he said was based in the Russian town of Kostroma.
He added: "Everything is different here, not like they show it on television. We've come as cannon fodder," he said in the film.
Another man in the footage, who gave his name as Sergeant Aleksei Generalov, said: "Stop sending in our boys. Why? This is not our war."
More than 2,000 people have been killed since April in the fighting, but the Ukrainian army has now largely pinned the rebels down in two eastern strongholds.
EU foreign policy chief Catherine Ashton and the leaders of Belarus and Kazakhstan were also taking part in the Minsk meeting, the first between Mr Putin and Mr Poroshenko since June 6.
Mr Poroshenko pointedly mentioned the other participants by name, but not Mr Putin, referring only to "the presence of the leadership of the Russian Federation".
Russia has called for a ceasefire many times and supports what it calls "a dialogue of national unity" that would boost the authority of Ukraine's regions.
But a unilateral ceasefire by Kiev in June was widely seen by Ukrainians as allowing the rebels a breathing space to regroup, and Mr Poroshenko could find it difficult to win support at home for a repeat, especially as government forces have the upper hand.
Ukraine will also resist any settlement that could give the eastern regions more power over policy decisions, potentially blocking moves by Kiev to shift closer to the EU or Nato.
Belarussian President Alexander Lukashenko said: "It's difficult to expect any colossal breakthrough today but we should start progress towards peace."