The suspended military cooperation includes the finalising of the Military Technical Cooperation Agreement and a joint naval exercise between France, Russia, Britain, and the US, Hague told the British Parliament, Xinhua reported.
The suspension also covers a proposed British Royal Navy ship visit to St. Petersburg and all senior military visits, Hague said.
His remarks came after Russian President Vladimir Putin and Crimean leaders signed a treaty to make Crimea and the city of Sevastopol part of Russian territory earlier on Tuesday.
In his statement, Hague also urged the European Union (EU) member states to take tougher measures against Russia on defence export licences.
Britain will suspend "with immediate effects" all extant licences and application processing for licences for direct export to Russia for "military and dual use items" destined for units of the Russian armed forces or other state agencies, Hague said.
It will also suspend licences for exports to third countries for incorporation into equipment for export to Russia where "there is a clear risk that the end product will be used against Ukraine".
The foreign secretary said preparatory work is underway for "a third tier of sanctions" against Russia, including economic and trade measures.
He urged the EU to rethink about its relations with Russia.
"We should be ready to contemplate a new state of relations between Russia and the West in the coming years that is different from the last twenty years," he said.
Hague characterised the "new state of relations" as one in which institutions such as the G8 are working without Russia, military cooperation and defence exports are curtailed, and decisions are accelerated to reduce European dependence on Russia energy exports.
He also stressed that relations between Russia and many nations in the world will be "permanently affected" if there is no progress on Ukraine.