Alliance will look at creating ‘spearhead’ rapid reaction unit of up to 4000 troops.
Vladimir Putin has boasted to European leaders his forces could sweep into Kiev in two weeks if he wanted.
The Russian President reportedly made the threat to the European Commission President during talks on the Ukraine crisis.
Putin told Jose Manuel Barroso, "If I want to, I can take Kiev in two weeks," Italy's La Repubblica newspaper reported. It implied this could be the result of the EU stepping up sanctions against Russia.
The comments, relayed by Barroso to colleagues at last weekend's EU summit, emerged as Nato announced it would build a new "spearhead" rapid reaction force of up to 4000 troops that could be flown into eastern Europe in 48 hours to respond to possible Russian aggression.
Yet the EU's head of foreign policy, Federica Mogherini, warned there was no military solution to what is Europe's biggest crisis in decades.
Anders Fogh Rasmussen, the secretary-general of the alliance, said Nato faced multiple crises on its southern and eastern borders that could erupt at any time.
Leaders of the alliance's 28 members are expected to agree to the new force at this week's Nato summit in Wales.
The spearhead force is part of a package of measures to sharpen up the alliance as it faces crises in Iraq and Ukraine. A senior Nato official said allies would take turns to command the spearhead and many of the arrangements would be in place by the end of the year. Troops would be based in their home countries and come together when necessary.
The summit will agree to stockpile supplies in eastern Europe so equipment and ammunition are waiting for the force when it arrives. Nato will also boost the number of exercises in the area. Rasmussen said the new spearhead force would "travel light and strike hard if needed".
It will include special forces, air, naval and intelligence detachments which will deploy alongside the soldiers of the host nation against an outside threat.
The alliance has not named Russia as the threat against which the measures are being taken and has stressed that the force can be deployed anywhere in the world. But it will be working alongside the Readiness Action Plan which will have bases, it is believed, in Estonia, Latvia, Lithuania, Poland and Romania.
The deployment is certain to be seen as provocative by the Kremlin. Under the 1997 Founding Act, which was viewed as ending the Cold War, Nato pledged to Boris Yeltsin's Government it would not have a permanent troop presence in any of the former Warsaw Pact states.
Nato insists the bases do not break the pact as they are not permanent. A senior official said: "We have been through this thoroughly, taken extensive legal advice, and this is not in breach of the act. There will not be permanent presence in these bases, there will not, for example, be personnel stationed there with their families."
Rasmussen said: "This is a time of multiple crises on several fronts. To the east, Russia is intervening overtly in Ukraine; to the south we see growing instability, with fragile states, the rise [of] extremism, and sectarian strife. These crises can erupt with little warning, move at great speed and they all affect our security in different ways.
"We will develop a spearhead within our response force. This will require reception facilities in Nato territory, pre-positioned equipment and supplies, command and control and logistics experts. So this force can travel light, but strike hard if needed.
"That also means more visible Nato presence in the east for as long as required, not because Nato wants to attack anyone, but because the dangers and the threats are more present and more visible and we'll do what it takes to defend our allies."