Ukraine said Thursday its forces were fighting to retain control of Soledar in the eastern Donetsk region but cautioned it was coming up against "difficult" resistance from Russian troops.
The Kremlin has made capturing the industrial region of Donetsk its primary objective after nearly one year of fighting that has seen its forces capitulate on larger goals like seizing the capital.
"The fiercest and heaviest fighting is continuing today in the area of Soledar," Deputy Defence Minister Ganna Malyar told reporters.
"Despite the difficult situation, Ukrainian soldiers are fighting stubbornly," she added.
Russian mercenary group Wagner claimed earlier this week its forces had captured Soledar, but the defence ministry in Moscow said fighting was ongoing and Ukraine denied any full takeover.
Both sides have conceded heavy losses in the fight for Soledar and the nearby larger town of Bakhmut, also key to Russia's aim to wrest all of Donetsk away from Ukraine.
The Kremlin on Thursday praised the "heroic" work by Russian forces fighting in Soledar and in other battles.
"Huge work has been done in Soledar, absolutely selfless heroic actions, not only in Soledar, but also in many places," Kremlin spokesman Dmitry Peskov said.
"There is still a lot of work ahead. The main work is yet to come," he added.
On Wednesday, Moscow announced a major military reshuffle, putting Chief of the General Staff Valery Gerasimov in charge of its operations in Ukraine.
A Moscow-based defense analyst, who spoke on condition of anonymity, told AFP that appointing an army chief in charge of Ukraine's operation was an "unprecedented decision" that showed "very serious problems" on the battlefield.
"This has not happened since 1941, when Marshal Georgy Zhukov was sent to the front to command."
- 'Brutal fighting' -
Russia wants to gain control of the entire eastern Donetsk region which it claimed to have annexed last year, despite not having complete military control over it.
Observers have said Soledar itself -- a salt mining town with an estimated pre-war population of more than 10,000 people -- is of little strategic importance.
Ukrainian presidential adviser Mykhaylo Podolyak said this week that for Ukraine, Bakhmut -- and with it Soledar -- could be a launching pad to retake the city of Donetsk, a Russian stronghold since 2014.
"There's a lot of blood, a lot of artillery duelling, a lot of close contact fighting, especially today in Soledar," Podolyak told AFP in an interview on Wednesday.
US Defence Secretary Lloyd Austin told reporters on Wednesday that Washington could not confirm Soledar had fallen and said the city had "gone back and forth a number of times, and it really is some pretty brutal fighting".
- 'Victory is important' -
Russia's capture of Soledar would allow it to sell a much-needed victory back home after months of humiliating setbacks and shrinking military aims.
"Any victory is important, especially because there hasn't been a victory in a while," Russian military analyst Anatoly Khramchikhin told AFP.
In the nearby city of Bakhmut, that has been shelled daily for months by Russian forces wanting to capture it, one of the few remaining doctors said she was determined to stay.
"When I enrolled in medical school, I took the Hippocratic oath, and I cannot betray these people," Elena Molchanova told AFP.
"As long as they are here, I'll be here," she said, adding that she was mainly distributing meagre medical supplies to some 8,000 residents still in the war-scarred city and handing out death certificates.