A military boot is seen at the road near Debaltseve, eastern Ukraine, 17 February 2015 REUTERS/Gleb Garanich

Ukraine has pulled its troops out of embattled transport hub Debaltseve, seen as a major setback for Kiev's forces in the wake of the fragile ceasefire agreement.

President Petro Poroshenko announced the withdrawal of 80% of units on Twitter after days of clashes against the pro-Russian rebels.

"This morning, the Armed Forces of Ukraine together with the National Guard completed the operation of the planned and organised withdrawal of units from Debaltseve," Poroshenko said.

"About 80% of units have already gotten out. We expect another two columns."

Russian President Vladimir Putin said the rebels surrounded Kiev forces and expected them to surrender, claims which Poroshenko denies.

Debaltseve has been at the centre of intense fighting in the days leading to and after the signing of the fragile peace deal in Minsk, where control over the key town was one of the major issues of disagreement during negotiations.

The retreat is seen by commentators as a major setback to the Ukrainian army and a blow to Poroshenko's authority, as Debaltseve is a strategic transport hub between the two main separatist cities of Donetsk and Lugansk.

Despite assurances from Russian Foreign Minister Sergei Lavrov on Wednesday (18 February) that the ceasefire should also extend to Debaltseve, he admitted the town was now rebel-controlled territory.

According to the Wall Street Journal one officer decided to take his 50 men out of the town when his armoured vehicle was hit on Tuesday, saying the situation became hopeless.

Poroshenko was expected to visit the town later on Wednesday and hold a meeting with security officials.