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A Ukrainian soldier looks out from a tank in the frontline city of Lyman, Donetsk region, Ukraine, in a file photo. Image Credit: REUTERS

KYIV, Ukraine: Ukraine’s defence ministry said on Saturday its forces were “entering” the key town of Lyman in the eastern Donetsk region that Russia annexed a day earlier.

“Ukrainian Air Assault Forces are entering Lyman, Donetsk region,” the ministry said on Twitter, posting a video of soldiers holding up a Ukrainian flag near a sign with the town’s name.

“We’re already in Lyman, but there are battles,” Serhii Cherevatyi, spokesperson for Ukraine’s eastern forces, said.

Russia, meanwhile, said it has withdrawn its troops from Lyman. Russia’s Tass and RIA news agencies, citing the Russian defence ministry, made the announcement.

"In connection with the creation of a threat of encirclement, the allied troops were withdrawn from the settlement of Krasny Lyman to more favourable lines," Russia's defence ministry said in its daily briefing.

The Ukrainian forces reached the eastern bastion of Lyman after claiming to have encircled thousands of Russian troops in a battlefield rebuttal to the Kremlin.

The capture of Lyman would be a major setback for Moscow after President Vladimir Putin proclaimed the annexation of the Donetsk region, along with three other regions.

Two grinning Ukrainian soldiers taped the yellow-and-blue national flag on to the “Lyman” welcome sign at the town’s entrance in Donetsk region’s north, a video posted by the president’s chief of staff showed.

“Oct. 1. We’re unfurling our state flag and establishing it on our land. Lyman will be Ukraine,” one of the soldiers said, standing on the bonnet of a military vehicle.

Russia had 5,000 to 5,500 troops at Lyman but the number of encircled troops could be lower because of casualties, a spokesperson for Ukraine’s eastern forces said.

“The Russian grouping in the area of Lyman is surrounded,” the spokesperson, Serhii Cherevatyi, said on television.

The Russian Defence Ministry did not immediately respond to a request for comment.

Russia’s last operational update was on Friday evening. On Saturday, the ministry’s Telegram channel published a series of congratulatory messages, including one from Putin, to mark an army holiday, Ground Forces Day.

Russian military bloggers said the loss of the town would be a serious blow for Moscow, but one said that some Russian forces had been able to withdraw and that Lyman was not fully surrounded.

Neither side’s battlefield assertions could be independently verified.

LOGISTICS HUB

Russia has used Lyman as a logistics and transport hub for its operations in the north of the Donetsk region. Its fall would be Ukraine’s biggest battlefield gain since a lightning counteroffensive in the northeastern Kharkiv region last month.

The Ukrainian military spokesperson said the capture of Lyman would allow Kyiv to advance into the Luhansk region, whose full capture Moscow announced at the beginning of July after weeks of slow, grinding advances.

“Lyman is important because it is the next step towards the liberation of the Ukrainian Donbas. It is an opportunity to go further to Kreminna and Sievierodonetsk, and it is psychologically very important,” he said.

Donetsk and Luhansk regions together make up the wider Donbas region that has been a major focus for Russia since soon after the start of Moscow’s attacks on February 24.

Putin proclaimed the Donbas regions of Donetsk and Luhansk and the southern regions of Kherson and Zaporizhzhia to be Russian land in Friday’s ceremony - a swathe of territory equal to about 18% of Ukraine’s total surface land area.

Ukraine and its Western allies branded Russia’s move as illegal. Kyiv vowed to continue liberating its land of Russian forces and said it would not hold peace talks with Moscow while Putin remained as president.

Retired U.S. General Ben Hodges, a former commander of the US Army in Europe, said a Russian defeat in Lyman after Putin’s declaration would be a major political and military embarrassment for the Russian leader.

“This puts in bright lights that his claim is illegitimate and cannot be enforced,” he said.