KIEV, June 19 - Ukrainian troops and pro-Russian separatists were locked in fierce fighting in the east of Ukraine on Thursday and a rebel commander acknowledged big losses among separatists heavily outgunned by government forces.

Even as President Petro Poroshenko and his team prepared to unveil their blueprint for ending more than two months of rebellion, government forces, using artillery and heavy armor, said they were tightening the noose on separatists near Krasny Liman, north of the main regional hub of Donetsk, Reuters reported.

Government forces said the fighting erupted in the early hours after rebels refused to lay down their arms as part of Poroshenko's peace plan.

Both Ukrainian government and rebel accounts of the fighting suggested a major battle involving armored vehicles including tanks.

One military source said 4,000 separatists were involved, while rebel sources in Donetsk said Ukrainian infantry supported by 20 tanks and many other armored vehicles were storming the village of Yampil, about 12 km (7 miles) east of Krasny Liman.

A top rebel commander, Igor Strelkov, reported "heavy losses" in equipment and arms among the separatists, faced with a huge superiority in heavy armor on the government side at Yampil.

"We beat off the first attack and destroyed one tank. But it is difficult to take on 20 tanks. The battle is going on. Our people are holding but we can't rule out that they (government forces) will break through," Strelkov, who is also known as Girkin, said in a videoed statement. He urged Moscow to "take some measures".

There was no word on casualties from the government side.

From the nearby town of Siversk, artillery blasts, small arms fire and machinegun-fire could be heard from about 3 km away. From high ground, smoke could be seen billowing from rebel positions under attack.

Poroshenko, installed as a president on June 7, is pushing a peace plan to end the rebellion which he said would be unveiled soon and presented to European Union ministers early next week.

It includes an offer of a unilateral ceasefire by government forces and amnesty for the separatists - but only if they lay down their weapons.
Poroshenko's website later said he outlined the plan to Russian President Vladimir Putin by phone on Thursday, highlighting the need for hostages to be freed and "an effective regime of control" established on the joint border.

It said Poroshenko emphasized he hoped for Putin's support for the plan and for any ceasefire that would be declared.

A government forces spokesman said on Thursday it was when rebels refused a call to disarm - made in leaflets fired by big guns into rebel positions - that fighting broke out in the early hours of the morning.

"We issued an ultimatum to the terrorists overnight to surrender their weapons. We guarantee their safety and investigation in line with Ukrainian law ... They refused," said government forces spokesman Vladyslav Seleznyov.

"Now we are trying to narrow the encirclement. They are trying to break out," Seleznyov said. (rt/ez)