Britain is to a head up a new rapid-reaction Nato "spearhead" force designed to deter Russian further aggression against former Soviet bloc states in eastern Europe, David Cameron has said.
On the final day of the alliance summit in South Wales, the Prime Minister said the UK would be the first member state to take charge of the 4,000-strong force when it becomes operational at the end of next year.
The UK will provide the largest contingent with a 1,000-strong battle group and headquarters for the force which will be on standby to deploy troops within two to five days in the event of a new crisis.
The Prime Minister also confirmed that the European Union would press ahead with a new round of sanctions against Russia, despite the agreement of a ceasefire with pro-Moscow rebels announced by Ukraine's President Petro Poroshenko.
Mr Cameron welcomed the truce, but said that Western sanctions would only be removed if "proper milestones" towards a lasting peace were reached.
The Prime Minister hailed a "hard-fought" agreement by all 28 Nato members to reverse the trend of cuts in defence spending and move towards meeting the alliance's target of spending 2% of GDP on defence over the coming decade - with a fifth of spending to go on major new equipment.
He sought to underline Britain's own commitment to alliance collective defence with an announcement that the Royal Navy's second new aircraft carrier - the Prince of Wales, due to be completed in 2017 - will enter service rather than be mothballed or sold off, enabling the UK to have a carrier available at all times.
The Newport summit has been dominated by concerns over Russian aggression in the east of Ukraine, as well as the violent uprising by Islamic State jihadis in Iraq and Syria.
The creation of a spearhead force able to deploy thousands of troops in a matter of days is intended to provide reassure to allies in eastern Europe such as members Estonia, Latvia and Lithuania who fear they could be the next targets of Soviet aggression.
Troops will be provided by member states on a rotation basis. It will have a headquarters in Poland and will be supported by the "pre-positioning" of supplies of fuel and ammunition in bases in eastern Europe.
Mr Cameron said that Britain would also be deploying 3,500 military personnel on a series of Nato exercises running to the end of 2015 intended to ensure a persistent alliance presence in the region while providing further financial assistance to the government in Kiev.
"We will continue our efforts to support Ukraine, including by providing financial assistance to improve their command, control and communication capabilities," said the Prime Minister.
"Nato members across Europe - particularly in central and eastern Europe - have been reassured that this is an alliance that will meet its treaty obligations to come to the defence of any member under threat.
"No one will leave here with any doubt that our collective security is as strong as it has ever been. The alliance is firmly committed to providing ongoing reassurance to our eastern allies."
US president Barack Obama said the agreement demonstrated that Nato was "fully united" behind Ukraine's independence, territorial sovereignty and right to self-defence.
"This commitment makes clear that Nato will not be complacent," he said.
Mr Poroshenko, who attended the summit as a Nato partner, said the new ceasefire was based on a 12-point plan drawn up on the basis of his phone conversation earlier this week with Russian president Vladimir Putin. All hostages held by rebel groups are expected to be freed by tomorrow.
"Now it is very important that this ceasefire lasts long and during this ceasefire we continue the political dialogue to bring peace and stability," said the Ukrainian president.
Nevertheless, Mr Cameron said that sanctions against Russia agreed by the European Union last weekend and due to be detailed later today will go ahead.
"The announcement about the ceasefire is good news," he said. "We need to look carefully at whether it is a ceasefire or whether it also includes a commitment, as I understand it might, to make real progress on a proper peace plan.
"We should be clear that the sanctions which we agreed last Saturday in Brussels will go ahead. But, of course, if a ceasefire and a proper peace plan are put in place, then it'll be right to look and see how those sanctions could potentially be removed if proper milestones are reached."
Mr Cameron denied the West was accepting a de facto partition of Ukraine or that Moscow was set to "get away" with its aggression.
The summit had sent a clear message to Russia that President Vladimir Putin's actions in Ukraine were "indefensible and wrong".
"We stand firmly behind Ukraine's right to make its own decisions, not to have them dictated by Russian tanks rolling over the border," he said.
Sanctions have proved effective and Moscow could see that the EU and US were acting together and there would be "more pressure" if aggression continued, said Mr Cameron, adding: "I am confident that we are taking the right approach."
Nato secretary general Anders Fogh Rasmussen said progress towards meeting the 2% pledge would be reviewed at every future summit of the trans-Atlantic alliance.
"This is no easy task, and there is much work to do," he said.
"But the direction of travel is clear and the security of our countries of citizens is too important for us to cut corners or to cut still more funds."
He said the creation of the spearhead force "sends a clear message to any potential aggressor: should you even think of attacking an ally, you will be facing the whole alliance".
Mr Obama paid a visit to Stonehenge after the end of the summit, the Associated Press reported.
It had been on his bucket list of things to do, according to the agency.