He spoke out after the Ukraine has pulled most of its troops out of the key battleground of Debaltseve, where fighting raged with heavy weapons despite a ceasefire agreement.
Speaking during a visit to West Sussex, Mr Cameron made clear that Mr Poroshenko’s agreement of a ceasefire deal with Russian president Vladimir Putin last week should not be the trigger to wind down EU sanctions against Russia.
Mr Cameron said: “Of course there’s a temptation for every European country just to say ‘Let’s go on trading exactly as we have done with Russia, let’s leave responsibility for what is happening in Ukraine to someone else and let’s turn away’.
“I am afraid that would be a terrible mistake and Britain has been leading the argument in Europe saying Russia’s behaviour in Ukraine has been completely unacceptable and consequences must follow that in terms of sanctions.”
Mr Cameron said Europe could not “turn a blind eye” to events in Ukraine, where he said “effectively one country is challenging the territorial integrity of another country”.
“Those Russian-backed rebels in eastern Ukraine, they are using Russian rocket launchers, Russian tanks, Russian artillery, you can’t buy this equipment on eBay, it hasn’t come from somewhere else, it’s come from Russia and we know that,” he said.
President Petro Poroshenko said the army has withdrawn 80 per cent of its troops from the town and two more columns have yet to leave.
He denied claims by the rebels that the Ukrainians were surrounded and said the troops were leaving Debaltseve with their weapons and ammunition.
The Russia-backed separatists reported taking hundreds of soldiers captive as they continued their onslaught on the strategic railroad junction.
Associated Press reporters saw dozens of Ukrainian troops retreating from Debaltseve with their weapons. Some were driving to the nearby town of Artemivsk in trucks while several others were on foot. One soldier spoke of heavy government losses, while another said they had not been able to get food for days because of the rebel shelling.
“We’re very happy to be here,” said one soldier. “We were praying all the time and already said goodbye to our lives a hundred times.”
Mr Poroshenko said: “Debaltseve was under our control, it was never encircled. Our troops and formations have left in an organised and planned manner.”
He spoke at a Kiev airport as he travelled to eastern Ukraine to “shake the hands” of the soldiers who were pulled out of Debaltseve.
Rebel spokesman Eduard Basurin said hundreds of Ukrainian soldiers had surrendered in Debaltseve. Russian state-owned television Wednesday showed images of Ukrainian troops being escorted along a village road by the rebels.
Kiev admitted that some soldiers had been taken prisoner in Debaltseve, but gave no details on how many were seized.
Russian President Vladimir Putin, on a visit to Budapest, had called on Kiev to admit defeat in the contested town, saying “the only choice” of the Ukrainian troops was to “leave behind weaponry, lay down arms and surrender”.
Fighting around Debaltseve, which links the two major separatist cities of Donetsk and Luhansk, had raged on despite a ceasefire deal brokered by European leaders which went into effect on Sunday.
Some retreating troops said they had not received any reinforcements from the government in Debaltseve and had been walking and retreating for a whole day.
EU foreign policy chief Federica Mogherini has accused Russian-backed rebels in Debaltseve of acting “in clear violation of the ceasefire”.
“Russia and the separatists have to immediately and fully implement the commitments agreed to in Minsk, in line with yesterday’s UN Security Council resolution, starting with the respect of the ceasefire and the withdrawal of all heavy weapons,” he said.
The separatists have raised a flag in triumph over the embattled town.
Nato Secretary General Jens Stoltenberg accused the separatists of refusing to respect a ceasefire agreement and urged Russia “to end support for separatists and to withdraw forces and military equipment from eastern Ukraine”.
Russia has denied supplying the separatists with troops and weapons, a claim dismissed by Western nations and Ukraine, who point to Nato satellite pictures of Russian weapons in eastern Ukraine.
The leaders of Russia, Ukraine, Germany and France, who negotiated the ceasefire deal last week, are expected to talk about its implementation later today.
The German government condemned the rebels’ advance on Debaltseve. Chancellor Angela Merkel’s spokesman Steffen Seibert described the onslaught as “a serious strain on the (Minsk ceasefire) agreement as well as hopes for peace in eastern Ukraine”.