Clegg said it was "unthinkable" at present that the tournament could go ahead in the country blamed by the West for supplying arms to the separatist rebels accused of causing the deaths of all 298 on board.
Football's world governing body FIFA recently ruled out calls from some German politicians for Russia to be boycotted, insisting the tournament could be "a force for good".
But Clegg told The Sunday Times that allowing it to go ahead without a change of course by Russian president Vladimir Putin would make the world look "weak" and "insincere" in its condemnation of Moscow's annexation of Crimea and support for the rebels.
With the EU extending the list of individuals and entities subjected to asset freezes and limiting state-owned banks' access to capital markets and to the arms and energy sectors, Clegg believes sporting events should also be part of the package of measures - including the cancellation of Russia's first Formula One Grand Prix, which is due to take place in Sochi in October.
Clegg said: "Vladimir Putin himself has to understand that he can't have his cake and eat it.
"He can't constantly, you know, push the patience of the international community beyond breaking point, destabilise a neighbouring country, protect these armed separatists in the east of Ukraine and still have the privilege and honour of receiving all the accolades in 2018 for being the host nation of the World Cup.
"That's why I've come to the view that if he doesn't change course it's just not on, the idea that Russia will host the World Cup in 2018. You can't have this - the beautiful game marred by the ugly aggression of Russia on the Russian Ukrainian border.
Pull the plug
"Not only would Vladimir Putin exploit it, I think it would make the rest of the world look so weak and so insincere about our protestations about Vladimir Putin's behaviour if we're not prepared to pull the plug."
He said that despite F1 boss Bernie Ecclestone's insistence there was no case for abandoning the Grand Prix, "the question marks I'm raising will only increase over the next coming weeks and months, over the summer and up to the Grand Prix, about Russia's entitlement to host these major events.
"Vladimir Putin is a past master at attending these sporting events and, sort of, pretending almost as if everything's utterly normal and nothing untoward is happening around him.
"And if anyone needed any reminding of how dangerous this conflict is in the heart of Europe, just ask any of the family and relatives of those loved ones they lost in that plane incident last week."
Clegg said the threat of withdrawing the World Cup would be "a very potent political and symbolic sanction".
"If there's one thing that Vladimir Putin cares about, as far as I can see, it's his sense of status. Maybe reminding him that you can't retain the same status in the world if you ignore the rest of the world, maybe that will have some effect on his thinking."
He did not rule out the United Kingdom as an alternative host given its recent history of putting on successful global sporting events.
"We've got the stadiums, we've got the infrastructure, and we've got the public backing and enthusiasm to host it," he added. "That's a decision for other people. But I'm not saying this just as a, sort of, British land grab to snatch the World Cup from under Vladimir Putin's nose."