Boris Johnson has announced a "first barrage" of sanctions against Russia, freezing the assets of five banks and three billionaires close to Vladimir Putin.
But MPs from all parties have complained that the measures do not go far enough, pointing to Germany’s bold move in suspending the Nord Stream 2 gas pipeline.
Only one of the five banks is among Russia’s 10 biggest, and British officials were unable to say how extensive are their assets in Britain.
Four of the banks are already subject to United States sanctions, while Gennady Timchenko and Boris and Igor Rothenberg, the three oligarchs who have been banned from entering Britain, have also been sanctioned by the US.
Mr Johnson told MPs the sanctions announced on Tuesday would be followed by tougher measures if Russian forces move deeper into Ukrainian territory.
“The government are already implementing a draconian package of sanctions and we will go further. We are bringing forward the economic crime bill and the register of beneficial interests,” he said.
“ In addition to all the things I have announced today, we will be bringing forward further measures to hit Russian individuals and Russian companies of strategic importance to Russia, stopping Russian companies from raising money on London markets and stopping them even trading in pounds and dollars. These will bite, these will hurt and these will make a huge difference.”
Labour leader Keir Starmer expressed support for the government's approach to the Ukraine crisis, calling for more military support for authorities in Kyiv. But he said that Britain must get its own house in order by ending London's status as a safe haven for Russian oligarchs and their money.
“We have failed to stop the flow of illicit Russian finance into Britain. A cottage industry does the bidding of those linked to Putin, and Russian money has been allowed to influence our politics. We have to admit that mistakes have been made, and we have to rectify them.
"This must be a turning point. We need an end to oligarch impunity. We need to draw a line under Companies House providing easy cover for shell companies. We need to ensure that our anti-money-laundering laws are enforced. We need to crack down on spies, and we have to ensure that money is not pouring into UK politics from abroad."
Former Conservative leader Iain Duncan Smith was among the MPs on the government side who expressed disappointment with the sanctions package, telling the prime minister that "if we are going to hit them with sanctions, we need to hit them hard and hit them now".
Officials suggested that sanctions were being co-ordinated with the US and European allies and that further measures would be tougher. Foreign secretary Liz Truss said that Britain would block a range of high-tech exports to Russia if Mr Putin did not pull back from the brink.
Britain is also set to follow the European Union in sanctioning Russian parliamentarians who voted to recognise the Ukrainian regions of Donetsk and Luhansk as independent republics.