Ukrainian troops have pulled out of the key eastern transport hub of Debaltseve after it was stormed by pro-Russian rebels, who now control the town.
Ukrainian troops began to withdraw from the town early on Wednesday, ending days of fighting for control over the strategic railway town which has been surrounded by the rebel fighters for weeks.
Ukraine President Petro Poroshenko on Wednesday called for a UN-mandated peacekeeping force to monitor the fast-crumbling ceasefire deal.
"We see the best format would be a police mission from the European Union. We are sure this would be the most effective and best guarantee for security," Poroshenko said at the start of a meeting with security chiefs.
Earlier on Wednesday, Poroshenko said government troops had withdrawn from Debaltseve in an "organised and coordinated" manner before meeting the troops.
"This morning the Ukrainian armed forces together with the National Guard completed an operation for a planned and organised withdrawal from Debaltseve," Poroshenko said in an audio message released by his press service.
Al Jazeera's Rory Challands, reporting from Moscow, said that the main objective was to humiliate Ukraine and create political instability in the country.
"The question is to see if Debaltseve is enough of a prize for the rebels or are they going to push for more ground," he said.
Russian Foreign Minister Sergey Lavrov on Wednesday called on all sides in the conflict to cease hostilities.
"We share concerns on the situation in Debaltseve," Lavrov said in a joint news briefing with his counterpart from Georgia's breakaway region of South Ossetia.
"But we believe that in order to calm this situation down it is necessary to stop using weapons trying to change the status quo which was at midnight on February 15," referring to the time the latest ceasefire came into operation.
Rebels say the truce, negotiated by Ukraine, Russia, Germany, and France at the summit in Belarus last week, does not apply to Debaltseve, which links the two rebel-controlled regions of eastern Ukraine - Donetsk and Luhansk.
"The actions by the Russia-backed separatists in Debaltseve are a clear violation of the ceasefire," European Union foreign policy chief Federica Mogherini said in Brussels, stepping up Western criticism of the rebel offensive against Debaltseve.
The leaders were due to convene for a high-level conference call later on Wednesday to discuss the latest developments and the implementation of the Minsk peace plan.
White House spokesman Josh Earnest said it was clear that Moscow and Russian-backed separatists in eastern Ukraine had not lived up to the terms of the ceasefire.
"Their failure to do so does put them at risk of greater costs," Earnest told reporters at a briefing, noting that the White House supports ongoing negotiations and had no update on whether the United States continued to consider supplying Ukraine with lethal weapons.
The war in eastern Ukraine has already killed more than 5,600 people and displaced more than a million, the UN said on Monday. It has also left the country's industrial heartland in ruins.
Source: Al Jazeera and agencies