KYIV - After a Ukrainian offensive, Moscow admitted on Friday that its troops had withdrawn north of Bakhmut, a city in Ukraine's battlefield, in what the head of Russia's Wagner private army called a rout.

The retreat is a setback for Russia, and coupled with similar reports of Ukrainian advances south of the city, suggests that Kyiv is making a coordinated effort to encircle Russian forces in Bakhmut, which has been Moscow's main objective for months during the bloodiest fighting in the war.

According to Serhiy Cherevatyi, spokesman for the "east" group of Ukrainian forces, "In three days of counter-offensive activity, the Ukrainian Armed Forces in the Bakhmut sector have liberated 17.3 sq. km (6.6 sq. miles) of territory," as reported on the Telegram messaging app.

Although both sides are reporting the largest Ukrainian gains in six months, Ukraine has not provided many details and downplayed the notion that a significant counteroffensive had begun.

Russian military officials have confirmed that they have retreated north of Bakhmut following a new Ukrainian offensive. The Ukrainian army reportedly liberated a territory of 17.3 sq. km in the Bakhmut sector in three days. According to Igor Konashenkov, a spokesman for the Russian Defence Ministry, the Ukrainians launched an assault with over 1,000 troops and up to 40 tanks, making it the biggest Ukrainian offensive since November.

While the Russians had repelled 26 attacks, they had fallen back in one area to regroup. Yevgeny Prigozhin, the head of the Wagner forces, stated that the Russians had suffered a defeat and not a regrouping. He confirmed that the Ukrainians had seized the high ground overlooking Bakhmut and the main highway leading into the city from the West. He also claimed that the Berkhivka reservoir was lost, meaning that Russia gave up a territory of 5 sq km.

According to Yevgeny Prigozhin, the head of the Wagner forces, the Ukrainian offensive has resulted in the complete liberation of the Chasiv Yar-Bakhmut road, which had been previously blocked by Russian forces.

He added that the Ukrainian troops have also seized the tactical high ground that overlooks Bakhmut.

Prigozhin also criticized Russia's regular military for failing to provide supplies to his men in Bakhmut.

Meanwhile, in Russian-occupied territory, two missiles hit an industrial complex in Luhansk, causing massive columns of smoke to rise above the city.

The strike, which is just beyond the range of Ukraine's main battlefield rockets, occurred a day after Britain announced its plan to send longer-range cruise missiles.

According to reports, the Ukrainian military has made significant gains in the Bakhmut area, including the recapture of territory previously held by Russian forces.

The Russian private army, Wagner, has reportedly suffered losses in the area, and its leader has referred to the Russian retreat as a "rout".

The Ukrainian military has confirmed fighting in the area and Russian shelling of nearby towns, but has not confirmed any Russian withdrawal. However, Reuters has not been able to independently verify the situation on the ground.

According to Prigozhin, his fighters have been trying to force Ukrainian troops out of the western outskirts of Bakhmut and claimed that the flanks, guarded by regular Russian troops, were weakening. However, Russia's defence ministry has denied this.

Ukrainian President Volodymyr Zelenskiy stated in his nightly address that the Russians are "already internally ready for defeat" and have lost this war in their minds. He believes that pressure must be put on them every day so that their sense of defeat turns into flight, mistakes, and losses.

In Kostiantynivka, a town about 20 km southwest of Bakhmut, a house caught fire after being hit by Russian shells, and firefighters were trying to extinguish the flames. Oleksandr Lazorka, who lives next door, described how the roof collapsed after being hit, and he and others managed to rescue an elderly blind woman from the rubble before the fire started.

The conflict in Ukraine has reached a critical juncture, as Kyiv has spent the last six months on the defensive while Russia launched a winter campaign that resulted in the deadliest ground combat in Europe since World War Two but yielded few gains.

However, since the beginning of this year, Kyiv has received hundreds of new tanks and armoured vehicles from Western countries, which it has held back in anticipation of a counteroffensive to retake occupied territory.

Although Ukrainian officials have downplayed the suggestion that their offensive has already begun, with President Zelenskiy saying that they need more time for equipment to arrive, Prigozhin has claimed that the advances near Bakhmut mark the beginning of Kyiv's campaign, and accused them of being deceptive.