One of Ukraine's most notorious separatist commanders suspected of committing war crimes has been assassinated in a bomb attack, prompting fears of a military escalation in the country’s embattled east.

Arseniy Pavlov, 33, a Russian-born mercenary better known by his nickname Motorola, was murdered alongside his bodyguard on Sunday when an improvised explosive device detonated in the lift of his apartment block in Donetsk, a stronghold for Moscow-backed separatists.

Grisly footage later showed a bloodied, debris-strewn corridor and a collection of ammunition, smoke bombs and knives salvaged from the men, who were clad in full body armour and heavily armed when the remote-controlled bomb exploded.

A military vehicle near an apartment building in Donetsk after Arseny Pavlov was killed by a bomb placed in a lift credit: Mikhail Sokolov/TASS

While rebel leaders blamed Sunday’s bombing on a Ukrainian sabotage group, Pavlov’s slick murder bears all the hallmarks of an inside job, possibly with the involvement of Russian special forces.

The maverick had gained a reputation as one of the most unwieldy and brutal warlords in the industrial Donbas region, presenting a potential rogue element within the chain of command.

Ukrainian government forces have been fighting Russian-backed separatists since 2014 in a war that has claimed around 10,000 lives. Intensified violence in recent weeks has seen hundreds of daily explosions along the front, including the use of grad missiles.

Pavlov, a former blue-collar worker and veteran of Russia’s second war in Chechnya, had led the "Sparta Battalion" against Ukrainian troops, later becoming a key figure in the devastating battle for Donetsk’s airport and boasting of executing 15 Ukrainian prisoners-of-war.

Arseny Pavlov pictured at the Union of Donbass Volunteers congress in Moscow last year credit: Sergei Karpukhin/Reuters

His demise not only marks the loss of one of the war's most sinister personalities but also fits into a disturbing pattern of disappearances and mysterious deaths of prominent figures in Ukraine’s volatile breakaway regions.

“Some suspect that Motorola was killed over an internal fight over control of the black market,” a regime source with links to senior separatists told The Telegraph.

“Others are saying that handlers higher up the chain are cleaning up first-generation rebels to destroy any incriminating evidence and remove witnesses to war crimes. The Kremlin needs its proxies to have a more acceptable public face.”

In the wake of Pavlov’s death, Aleksandr Zakharchenko, leader of the DNR, accused Kiev’s forces of breaking the ceasefire and warned that “no mercy will be given” to Ukrainian soldiers and intelligence officers.

He described Pavlov as a “close friend” and said his death amounted to “a declaration of war.”

Ukraine's former head of foreign intelligence, Mykola Malomuzh, claimed that Pavlov had been in “serious dispute” with other pro-Russian militants, adding that his death was either approved by Moscow or the result of a “domestic showdown”.

All parties to the Ukraine conflict agreed to a peace deal brokered by Germany and France in February 2015, but while the so-called Minsk accords reduced the intensity of fighting, they failed to stop it.