Ukrainian government forces have confirmed that they are preparing for the "final stage" of recapturing the city of Donetsk, currently held by pro-Russian separatists.

The Ukrainian military's spokesman, Andriy Lysenko, said that Kiev's forces had split Donetsk from Luhansk, the other rebel-held city.

"The forces of the anti-terrorist operation are preparing for the final stage of liberating Donetsk," Lysenko said.

"Our forces have completely cut Donetsk off from Luhansk. We are working to liberate both towns but it's better to liberate Donetsk first - it is more important."

The city has witnessed four months of conflict with shells and gunfire being traded over the weekend.

According to the city council, over 100 convicts escaped a high-security prison in Donetsk after a Ukrainian army shell struck the facility.

The rebels have declared Donetsk a "People's Republic" after holding a referendum decried by Kiev and the European Union in May.

Government forces have demanded that the separatists surrender but they said there would be no cessation to the fighting until Kiev's troops left the region.

UN agencies estimate that more than 1,100 people have been killed in the fighting between the pro-Russian rebels and the Ukrainian military since April.

The downing of Malaysia Airlines flight MH17, suspected of being shot down by the rebels and killing 298 passengers and crew, has again put the spotlight on the ex-Soviet state and Moscow's relationship with the separatists in eastern Ukraine.