The UN secretary general, Ban Ki-moon, has warned western powers "there is no military solution" to the Ukraine crisis, after the government in Kiev accused Russia of launching a "great war".

As Nato prepares to upgrade its combat readiness in eastern Europe, Ban said he was greatly concerned at developments in Ukraine and wanted to avoid further deterioration to "a very chaotic and dangerous situation".

"I know the European Union, the Americans and most of the western countries are discussing very seriously among themselves how to handle this matter," he told reporters on Tuesday during a visit to New Zealand.

"What is important at this time is that they should know there is no military solution in this. There should be a political dialogue for a political solution, that is the more sustainable way," Ban said.

His comments came after European-mediated talks on the fast-escalating crisis opened on Monday behind closed doors in the Belarusian capital, Minsk, attended by Ukraine government, separatist and Russian envoys.

The rebels have launched a major counter-offensive in recent days that the Ukrainian government and its western allies claim is backed by Russian forces – a charge Moscow denies.

Ukraine's defence minister, Valeriy Heletey, vowed on Monday to "immediately mount defences against Russia, which is trying not only to secure positions held by terrorists before but to advance on other territories of Ukraine".

"A great war arrived at our doorstep, the likes of which Europe has not seen since World War II," he posted on Facebook, warning of "tens of thousands of deaths".

Russian agencies quoted rebel representatives at the Belarus meeting demanding that Kiev provide the separatist regions of Donetsk and Lugansk with a "unique procedure" that would let them integrate closer with Russia.

The developments came a day after the Russian president, Vladimir Putin, said for the first time that the issue of "statehood" should be discussed in talks on the crisis in the east, where fighting has killed more than 2,600 people since mid-April.

Incoming EU chief diplomat, the Italian foreign minister Federica Mogherini, will on Tuesday outline to the European parliament's foreign affairs committee her view of the Ukraine crisis along with other international issues.

On the ground, Kiev said its forces south of the rebel hub of Luhansk were forced to retreat from the local airfield and a nearby village after withstanding artillery fire and fighting a Russian tank battalion.

"There is direct, overt aggression against Ukraine from the neighbouring state," Ukraine's president, Petro Poroshenko, said.

The retreat marked the latest setback for Ukrainian troops, which had been closing in on rebels in Donetsk and Lugansk until about a week ago, when the insurgents opened a new front in the south.

Since then, the rebels' lightning offensive has forced Ukrainian army units to abandon numerous positions to gear up for the defence of the south-east, in particular the strategic port city of Mariupol, which had been peaceful for months after government troops routed the rebels in May.

AFP correspondents said the presence of the Ukrainian army in the region had visibly decreased in recent days.

A senior Ukrainian security official told AFP that Russia's goal was to "destabilise [Ukraine] and create a land corridor to Crimea", the Black Sea peninsula annexed by Moscow in March but connected to Russia only by an old and overloaded ferry link.

Kiev and the west have repeatedly accused Russia of direct involvement in Ukraine, with Nato saying last week that Russia had more than 1,000 of its troops deployed in Ukraine and 20,000 massed along the border.

Rights activists in Moscow say that up to 15,000 Russian soldiers have been sent across the Ukrainian border over the past two months.

Nato chief Anders Fogh Rasmussen said ahead of the western military alliance's two-day summit in Wales that opens on Thursday that the growing Russian threat meant the cold war-era bloc must create a bigger presence in eastern Europe.

"We must face the reality that Russia … considers Nato an adversary," he told reporters. "We cannot afford to be naive."

Kiev has asked Nato for help and Poroshenko is expected to travel to Wales and meet the US president, Barack Obama.

Russia has repeatedly denied helping the insurgency, with its foreign minister, Sergei Lavrov, declaring on Monday that "there will be no military intervention [in Ukraine]".

The EU warned Moscow on Sunday that it would impose fresh sanctions unless it reversed course in the crisis within a week.

Putin responded on Monday by saying that he hoped "common sense will prevail" and urged the bloc to "work together normally" with Moscow.

However, the same day, the German president, Joachim Gauck, said Russia had "effectively severed its partnership" with Europe and wanted to establish a new order.