Russia had violated “every commitment” made in the failing Minsk agreement, he added, after talks with German Chancellor Angela Merkel on a new peace deal.
Barack Obama has come under pressure from senior US officials to supply arms, despite objections from Angela Merkel.
Russia denies accusations of sending troops and supplying the rebels.
The latest diplomatic efforts come amid renewed fighting between the pro-Russia rebels and Ukrainian government troops, with fighting centered around the strategic railway hub of Debaltseve.
The rebels said on February 9 they had cut off a key supply road to the town, which is near the rebel-held city of Donetsk, but the military says the battle is ongoing.
Ukrainian government officials say nine soldiers and at least seven civilians have been killed in fighting over the last 24 hours.
The crisis in Ukraine has already claimed more than 5,300 lives and displaced 1.5 million people from their homes.
Angela Merkel met Barack Obama in Washington on February 9 to update him on Franco-German efforts to revive last year’s Minsk peace plan, which collapsed amid fighting over the winter.
The detailed proposals have not been released but the plan is thought to include a demilitarized zone of 50-70km (31-44 miles) around the current front line.
Four-way talks between Russia, Ukraine, Germany and France are due to be held in Belarus’s capital Minsk on February 11 to discuss the proposals.
Speaking alongside Angela Merkel, President Barack Obama said the option of lethal defensive weapons for the Ukrainian government remained on the table.
“If, in fact, diplomacy fails, what I’ve asked my team to do is to look at all options,” he said, adding that offering lethal arms was only one of the options under consideration.
Angela Merkel, who has made it clear she opposes sending lethal arms, acknowledged setbacks in efforts to reach a diplomatic solution with Russia over Ukraine, but said that they would continue.
Meanwhile Barack Obama criticized Russian aggression in Ukraine, saying that the borders of Europe could not be “redrawn at the barrel of a gun”.
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