Ukrainian troops have pulled out of the hotspot eastern town of Debaltseve after it was stormed by pro-Russian rebels in what the EU said was a "clear violation" of an internationally-backed truce.
Ukrainian President Petro Poroshenko said 80 per cent of the thousands of soldiers in the town - a strategic railway hub sandwiched between the two main rebel-held cities of Donetsk and Lugansk - had withdrawn.
AFP journalists near the town, who were prevented from entering, saw dozens of army tanks and vehicles carrying haggard soldiers leaving Debaltseve.
The rebels' assault on Debaltseve dealt a bad blow to the European-brokered truce agreed by all sides last week in a bid to quell a 10-month conflict that has killed more than 5600 people.
Western countries blamed the persistent violence on Russia. They say Moscow is cynically playing with the truce - which won unanimous backing from the UN Security Council on Tuesday - to keep Ukraine destabilised.
"The actions by the Russia-backed separatists in Debaltseve are a clear violation of the ceasefire," EU foreign policy chief Federica Mogherini said in a statement on Wednesday.
She said safe passage for all who wanted to leave the area must be ensured.
The EU and Canada this week ratcheted up sanctions on Russia over its perceived military role in the conflict.
Russian President Vladimir Putin, who repeatedly denies directly helping the insurgency, had on Tuesday urged the Ukrainian soldiers in Debaltseve to surrender.
"Obviously it's bad to lose," Putin said during a visit to Hungary. "But life is life and it still goes on."
A rebel military spokesman, Eduard Basurin, told Russian television on Wednesday that more than 300 Ukrainian soldiers had given themselves up to the insurgents, the Interfax news agency reported.
A regional deputy police chief in Debaltseve, Ilya Kiva, admitted to AFP by telephone on Wednesday that some soldiers were taken prisoner but would not say how many.
Kiva confirmed the soldiers' evacuation from the town, but added that some "street fighting continues".
Amnesty International has expressed concern about the treatment of prisoners taken in the Ukraine conflict, noting brutality by both sides.
An estimated 5000 civilians are thought to have been trapped in the town, with little water or food.
Journalists, and Organisation for Security and Cooperation in Europe officials tasked with monitoring the ceasefire, have been barred from Debaltseve by the rebels surrounding it and were therefore unable to verify the situation.
Poroshenko, who was to visit the front line on Wednesday, said the troop pull-out from the town was "a planned and organised withdrawal" and that, "from 2000 soldiers, we have 30 who are wounded".
The leader said hostilities in Debaltseve "demonstrate to the world the true face of the bandit separatists supported by Russia". He reiterated a call for the US and EU to get "tough" with Moscow.
The US White House issued a statement that "strongly condemned the violation of the ceasefire by separatist forces acting in concert with Russian forces" and warned that "the costs to Russia will rise" if the truce is further degraded.
A worker at a hospital in the Debaltseve's neighbouring town of Gorlivka said "several soldiers underwent emergency surgery" there early on Wednesday.
Occasional artillery blasts could be heard. A Gorlivka municipal councillor, Tatiana Dementchenko, said the bombardments had been non-stop overnight.
"We really hope that will all cease very soon. We've lost so many men, so many civilians," she said, adding that two children, aged two and four, were killed by shelling near her apartment on Sunday - the first day of the ceasefire.
"The shelling hasn't stopped since. That's what the truce looks like here."
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