Rebels in east Ukraine yesterday appeared to have seized swathes of territory from government forces who abandoned vehicles and ammunition as they retreated, while Western intelligence said Russian army units were operating inside the country.
After weeks of successful military operations that have seen government forces push deep into the last rebel bastions, the tide appears to be turning once again in the four-month conflict, prompting a nervous government in Kiev to call on Nato for help.
AFP journalists saw no signs of government troops south of the rebel-held city of Donetsk, with road blocks on the entire 100-kilometre stretch to the Azov Sea manned by pro-Russian rebels.
A volunteer commander posted on Facebook that government forces were surrounded in the key transport hub of Ilovaysk and reinforcements were desperately needed.
Evidence of the deteriorating situation emerged just hours after the first meeting in three months between President Petro Poroshenko and Russian counterpart Vladimir Putin which failed to achieve any concrete breakthrough.
There is increasing concern in Kiev over Russia's willingness to intervene directly in the conflict, with the Ukraine government yesterday claiming that a battalion of Russian soldiers had set up a military headquarters near the village of Pobeda, around 50 kilometres southeast of Donetsk.
Nato and Polish intelligence also have evidence of regular Russian army units operating in Ukraine, Poland's PM Donald Tusk told his House yesterday.
Russian Foreign Minister Sergei Lavrov said the Kremlin was "not interested in breaking up" Ukraine. He confirmed that Russia will send more aid convoys into Ukraine "in the nearest future", despite complaints from Kiev that they were a breach of sovereignty.
Kiev yesterday said that 13 soldiers had died in the past 24 hours.
Meanwhile, Ukraine's Prime Minister Arseniy Yatsenyuk said it was time for Nato to act when the alliance holds a summit in Wales next week.
"We expect our Western partners and the alliance to provide practical help and take crucial decisions at the summit in September," he said.
Russia vehemently opposes closer ties between Ukraine and Nato. Concerns that Kiev could be drawn closer into the Western security alliance are seen as the main motivation behind Russia's actions in recent months.
Nato chief Anders Fogh Rasmussen said in an interview published yesterday that the alliance was preparing a rapid response unit specifically designed to deploy troops swiftly in eastern Europe.