Pro-Russian rebels have opened up a new front in south-eastern Ukraine.
Reports say they have taken the town of Novoazovsk, on the Sea of Azov, and are heading for the key port of Mariupol.
Ukraine says Russian forces have crossed the border and are supporting the rebel attack, but the Moscow government has repeatedly denied arming or covertly supporting the rebels.
There are suspicions that Russia wants to divert Ukrainian forces from the besieged cities of Donetsk and Luhansk.
Government forces have made significant advances against the separatists in recent weeks.
German Chancellor Angela Merkel has demanded an explanation from Russia’s President Vladimir Putin amid the reports of an incursion.
The US said it suspected a Russian-directed counter-offensive was under way.
Reports from journalists and military on the ground suggest that Novoazovsk had been captured by the rebels.
“The guys from the east shot the positions of the Ukrainian army and the army left Novoazovsk,”
A Ukrainian company commander, Vladimir Shilov, told Ukrainian TV that the town was blocked by tanks and no-one was allowed to leave. Local officials had already fled to Mariupol, he added.
A spokesman for the rebels told Interfax news agency that Novoazovsk was under their control and they would soon “liberate” Mariupol.
The port has until now been peaceful and cut off from rebel positions.
Rebels have been trying for weeks to break out of an area further north in the Donetsk region where they are almost encircled.
Analysts say the separatists could also be seeking a land link between Russia and Crimea, which also would give them control over the entire Sea of Azov.
Russia annexed the Black Sea peninsula of Crimea from Ukraine in March.