The Russian Defense Ministry says it has withdrawn its troops from the strategic eastern Ukrainian town of Lyman, hours after Kyiv said it had surrounded Russian forces there and a day after Moscow said it was annexing the surrounding Donetsk region.
"In connection with the creation of a threat of encirclement, allied troops were withdrawn from the settlement of [Lyman] to more advantageous lines," the ministry said on October 1.
It said, without providing evidence, that it had inflicted heavy casualties on Ukrainian troops in the fight for the town.
But it added that it was forced to withdraw when "the enemy, having a significant superiority in forces and means, introduced reserves and continued the offensive in this direction."
Moments before the Russian withdrawal announcement, Ukraine's Defense Ministry said its forces had entered Lyman, a crucial rail hub that had been the target of Kyiv's counteroffensive in recent days.
"Ukrainian Air Assault Forces are entering Lyman, Donetsk region," the ministry said on Twitter on October 1.
The Twitter post included a video of two soldiers taping a Ukrainian flag up near a sign bearing the name of the town.
"We're unfurling our state flag and establishing it on our land. Lyman will be Ukraine," one of the soldiers says in the video.
Serhiy Cherevatiy, spokesman for the Ukrainian Eastern Group of Forces, said earlier on October 1 that Ukrainian forces had encircled Russian troops near the crucial rail hub northeast of Slovyansk.
"The Russian group in the Lyman area is surrounded," Cherevatiy said. "The settlements of Yampil, Novoselivka, Shandryholove, Drobysheve, and Stavky have been liberated and stabilization measures are being taken there."
Moscow has used Lyman as a logistical hub for operations in the northern part of the Donetsk region. Its fall would mark the most serious setback for Russian forces since a lightning Ukrainian counteroffensive sent Russian troops reeling in the Kharkiv region last month.
Cherevatiy estimated the number of surrounded Russian troops at about 5,000, adding that Russian forces continue to try to break out of the encirclement.
One road, to the Russian-occupied city of Kreminna, appeared to remain open early on October 1, perhaps giving Russian forces one last escape route.
It was not immediately clear how many Russian troops may have escaped the encirclement nor were there any initial reports on casualties from either side in the latest fighting.
Cherevatiy added that the liberation of Lyman would enable Ukrainian forces to push into the Luhansk region "toward Kreminna and Syevyerodonetsk."
Such a move would further embarrass the Kremlin, which declared the Luhansk region fully occupied in early July.
"It is psychologically very important," Cherevatiy said, emphasizing that "the operation is not yet over."
Russian President Vladimir Putin on September 30 illegally proclaimed the partially occupied Ukrainian regions of Luhansk, Donetsk, Kherson, and Zaporizhzhya as Russian territory, a significant political escalation that was broadly condemned by the West.
SEE ALSO: Putin Signs Documents Seizing Parts Of Ukraine As He Lashes Out At WestThe four regions together with Crimea, which Moscow grabbed in 2014, make up around 20 percent of Ukraine, including some of its most industrialized territory.
Kyiv has said it will not negotiate with Moscow as long as Putin remains in power.