Russia-backed rebels in eastern Ukraine claimed to have seized most of the flashpoint town of Debaltseve, after days of intense fighting despite a shaky ceasefire agreement.
However Kiev denied they had lost control of the strategic transport hub between the two main separatist cities of Donetsk and Lugansk.
The self-proclaimed defence ministry of the Donetsk People's Republic told local press that the insurgents had successfully pushed government troops out of town.
"The larger part of Debaltsevo is under our control while Ukraine's military is controlling only the western part of the town," a ministry spokesman told Donetsk News Agency, according to Russia's Tass.
"We have gained control of the territory because Ukrainian troops are actively and voluntarily surrendering and leaving their positions".
Ukrainian military spokesman Andriy Lysenko said that government troops were holding their ground.
"At the moment there is fierce fighting on the outskirts of the town. There are clashes around the station. But our forces are holding their positions and they are completely within their rights to open fire in response," Lysenko said in a televised briefing, Reuters reported.
Debaltseve has been the epicentre of fighting in the days leading to and following the signing of peace deal in Minsk.
Control over the key town was one of the major issues of disagreement during negotiations brokered by German Chancellor Angela Merkel and French President Francois Hollande, last week.
Russian president Vladimir Putin maintained that the separatists had surrounded Kiev forces there and expected them to surrender, while Ukraine refused saying such condition was unacceptable.
The ceasefire was agreed without resolving the issue.
After the deal entered into force at the weekend, fighting stopped or subsided in most of eastern Ukraine but not in Debaltseve.
As a consequence, both belligerent parties said they were not going to withdraw heavy weapons from the front line of the conflict as by the peace deal.
More than 5,600 people have died since the start of the conflict, according to UN figures.