KIEV, Jan. 26 - Russian-backed rebels advanced to encircle a Ukrainian army garrison town on Monday in a new offensive that has again unleashed all-out war after a five-month ceasefire and brought threats of new Western sanctions against Moscow, Reuters reported.

The United States and the European Union are considering new measures after accusing Russia of openly supporting the latest rebel advance with money, arms and troops on the ground.

Ambassadors of NATO countries and Ukraine met in Brussels on Monday to discuss a response to the fighting, their first such emergency meeting since August.

Moscow denies playing a military role. Russian President Vladimir Putin accused Kiev of prolonging the conflict by refusing to talk to the rebels.

In a provocative new charge, Putin also said a "foreign NATO legion" was fighting alongside Ukrainian forces. NATO called the accusation "nonsense" and said the only foreign troops in Ukraine were Russians.

The government in Kiev ordered a state of emergency across the two rebel-dominated provinces and placed all Ukrainian territory on high alert.

Its military said seven Ukrainian soldiers had been killed and 24 wounded in intensified clashes in the past 24 hours, with heavy fighting at Debaltseve, a small town the rebels have vowed to encircle to safeguard their main strongholds.

Violence in eastern Ukraine is at by far its worst since a ceasefire was agreed last September. Casualties have mounted, including in the big government-held port of Mariupol where Kiev says 30 civilians were killed in rebel shelling on Saturday.

The rebels are targeting Debaltseve, a town with a population of around 26,000 that straddles the main road and train line between the two principal rebel strongholds, Donetsk and Luhansk. They say the government garrison there allows Kiev's guns to menace civilian areas.

"Look on the map. There is a so-called 'Debaltseve tongue'," separatist deputy commander Eduard Basurin told Reuters by telephone, referring to a kink in the frontline where the government holds the town. The rebel goal was "to push (government forces) further back from us, from settlements, and straighten the (front) line," he said.

Ivan, a 35-year-old who fled Debaltseve months ago but spoke earlier on Monday to relatives inside the town, said it was almost entirely surrounded by the rebel advance.

"It's been almost impossible to get through for the past 48 hours. The road is being shot up by separatists. There is no electricity, no water. The hospital is all smashed up and the shops aren't working," said Ivan, who declined to use his surname for security reasons.

"Ukrainian troops are still holding on in the town, but the question is how long they can hold on without more support." (rt/ez)