Ukraine said Friday its troops were locked in "fierce" fighting with Russian troops for control of the town of Vugledar in the region of Donetsk on the eastern front.
Russian-backed forces claimed they were "waiting for good news" from the town, which had a pre-invasion population of around 15,000 people, but Kyiv said Moscow's troops were misrepresenting any gains.
"There is fierce combat there," Ukrainian military spokesman Sergiy Cherevaty told local media.
"For many months, the military of the Russian Federation... has been trying to achieve significant success there," he said.
Moscow has made the capture of the industrial region of Donetsk its priority in its nearly year-long war in Ukraine.
Russian leader Vladimir Putin claimed last year to have annexed the territory even though his troops only partially control it.
Kremlin-backed separatists have controlled parts of Donetsk, including its largest city, since 2014.
Vugledar is about 150 kilometres (93 miles) south of Bakhmut, where Russian troops have been fighting for control longer than for any other city since the invasion.
"We are waiting for good news from Vugledar. The encirclement and subsequent liberation of this city solves many problems," said Denis Pushilin, the Moscow-appointed leader of the Donetsk region.
"Soon, Vugledar may become a new, very important success for us," he was quoted as saying by Russian news agencies.
Russian news agency RIA-Novosti reported that an advisor to Pushilin announced that Russian forces had entered Vugledar and entrenched themselves.
But the Ukrainian military spokesman said: "the enemy, to put it mildly, exaggerates its achievements".
Ukraine said earlier this week that Russian forces were "intensifying" efforts to capture both Bakhmut and Vugledar, and their forces were outnumbered by Russian personnel and firepower.
It also conceded that Ukrainian troops had withdrawn from the Donetsk town of Soledar, whose capture Russia recently hailed as an important victory.