Ukrainian President Petro Poroshenko has warned of a possible large-scale offensive by separatist forces in the east, one day after a major battle erupted on the western edge of the main separatist rebel stronghold.

Hostilities on Wednesday left more than a dozen dead and brought a February cease-fire agreement between Russia-backed rebels and government troops to breaking point.

In his annual address at Parliament on Thursday, Poroshenko spoke of a "colossal threat of the resumption of large-scale hostilities by Russian and terrorist forces" and said there are 9,000 Russian troops in the rebel-controlled area right now.

Russia has strongly denied supplying the rebels either with weapons or with recruits, despite mounting evidence suggesting otherwise.