Shelling of Donetsk has continued as Ukrainian troops have moved closer to the rebel stronghold.

Black smoke could be seen rising in various districts of the city and sound of artillery fire could be heard.

Artillery shells hit close to the centre of Donetsk for the first time yesterday killing at least one person, as a large Russian aid convoy rumbled towards the border.

Kiev's forces took control of the settlement of Novosvitlivka, which they said blocked off the last route the separatists could use to move between Luhansk and Donetsk.

They have also entered Avdiidka, 20km north of Donetsk.

Ukrainian troops have been slowly encircling Donetsk, the regional hub with a peacetime population of nearly a million.

But the Donetsk rebel leader seemed upbeat and spoke of the counter attack.

“Now we will lift the siege of Luhansk. I think by tonight the siege (of Luhansk) will be over, but I won't talk about the second phase of our counter attack”, said Alexander Zakharchenko, the head of the Donetsk People's republic at a news conference in Donetsk tonight.

He also blamed Ukrainian authorities for preventing a Russian humanitarian convoy from entering Ukraine.

The convoy of some 280 trucks remained in open fields near the Russian town of Kamensk-Shakhtinsky, about 20km from the Ukrainian border, where it has arrived the day before.

The International Committee of the Red Cross has urged Russia and Ukraine to quickly agree on getting supplies from the aid cargo to civilians in conflict areas.

Meanwhile, Ukraine said its artillery destroyed part of a Russian armoured column that entered its territory overnight and said its forces came under shellfire from Russia today in what appeared to be a major military escalation between the ex-Soviet states.

Russia's government denied its forces had crossed into Ukraine, calling the Ukrainian report “some kind of fantasy” and in turn raised its own serious concerns about activity by the US-led NATO defence alliance near its borders.

President Petro Poroshenko told British Prime Minister David Cameron Ukrainian artillery destroyed a "significant" part of a Russian armoured column that crossed into Ukraine during the night, according to the presidential website.

Separately, a Ukrainian military spokesman said Ukrainian forces had tracked the Russian armoured column as soon as it crossed onto Ukrainian soil.

"Appropriate actions were undertaken and a part of it no longer exists," military spokesman Andriy Lysenko told journalists.

The European Union said it would consider any unilateral military actions by Russia in Ukraine as "a blatant violation of international law".

EU foreign ministers said in a statement after talks in Brussels that the bloc was "increasingly concerned at the worsening crisis in eastern Ukraine and its humanitarian impact on the civilian population.

"Any unilateral military actions on the part of the Russian Federation in Ukraine under any pretext, including humanitarian, will be considered by the European Union as a blatant violation of international law," it said.

The EU, it said, remained ready to consider further sanctions on Russia "in light of the evolution of the situation on the ground."

The United States and the European Union have imposed sanctions on Russia over its role in eastern Ukraine and the earlier annexation of Ukraine's region of Crimea, in what has become the worst crisis in relations between Russia and the West since the Cold War.

Relief agencies said people living in Luhansk and in Donetsk face shortages of water, food and electricity after four months of conflict, in which the United Nations says more than 2,000 people have been killed.

Ukraine blames Russia and the separatists for the plight of the civilians, but their situation has grown more acute as the Ukrainian military has pressed its offensive, including in areas where civilians live.