According to the document, published by the EU committee of the House of Lords on Friday, "there has been a strong element of 'sleep walking' into the current crisis, with Member States being taken by surprise by events in Ukraine".
The report says Britain has not been "active or visible enough" in dealing with the situation in Ukraine. Part of the problem, it says, has to do with cuts to the Foreign Office, which resulted in fewer Russian experts working there and less emphasis on analysis.
The same happened in many EU foreign ministries, the report says, which left them ill-equipped to formulate an "authoritative response" to the crisis.
The report also claims that the EU's relationship with Moscow has been based for far too long on the "optimistic premise" that Russia was on a trajectory to becoming a democratic country.
As a result, EU governments failed to appreciate the depth of Russian hostility when the EU opened talks aimed at establishing an association agreement with Ukraine in 2013, according to the document.
Committee chairman Lord Tugendhat told the BBC: "The lack of robust analytical capacity, in both the UK and the EU, effectively led to a catastrophic misreading of the mood in the run-up to the crisis."
A Foreign Office spokeswoman is quoted by the BBC as saying that no-one could have predicted the scale of the "unjustifiable and illegal" Russian intervention in eastern Ukraine.
"The blame lies squarely with the pro-Russian separatists, backed by the Russian authorities, not with an Association Agreement between the EU and Ukraine which had been under negotiation for more than seven years before Russia decided to illegally invade and then annex part of its neighbour," she told the BBC.
"If the Ukrainian people want a closer social, economic and political relationship with the EU, that is for the people of Ukraine to decide, not Russia."
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