Ukrainian President Petro Poroshenko.

Ukrainian President Petro Poroshenko. Photo: AFP

Kiev: Russian and Ukrainian leaders have agreed on steps needed for a ceasefire in eastern Ukraine, but Moscow cannot be party to any agreement as it is not involved in the conflict, a Kremlin spokesman says.

"[Vladimir] Putin and [Petro] Poroshenko really did discuss steps which would lead to a ceasefire between rebels and Ukrainian troops," Kremlin spokesman Dmitry Peskov was quoted as saying by the RIA-Novosti news agency, after Ukraine's President, Mr Poroshenko, announced he and Mr Putin had agreed to a permanent truce.

"But in principle Russia cannot agree on a ceasefire as it is not a participant in the conflict."

Russian President Vladimir Putin

Russian President Vladimir Putin Photo: AP

Earlier, Mr Poroshenko announced that Mr Putin and he had agreed to a "permanent ceasefire" in fighting engulfing the east of the former Soviet state following a telephone exchange.

Mr Putin and Mr Poroshenko had reached "an agreement for a permanent ceasefire in Donbass [eastern Ukraine]," Mr Poroshenko office said in a statement on Wednesday.

The word "permanent" was later removed from his website, casting doubt on the whole agreement.

In Estonia, US President Barack Obama said on Wednesday it was still "too early" to know what the ceasefire that Kiev claimed to have concluded with Moscow really meant.

"We have consistently supported the effort of President Poroshenko of achieving a meaningful ceasefire that could lead to a political settlement," Mr Obama told a news conference in Tallinn during a brief visit intended to underline US commitment to a frontline eastern NATO state.

"So far it hasn't helped, either because Russia has not been serious about it or it's pretended that it's not controlling the separatists, and separatists, when they thought it was to their advantage, have not abided by the ceasefire."

Russia denies it has sent armour or troops into eastern Ukraine, a largely-Russian speaking area which has seen separatist fighting since April. More than 2600 have died in the conflict which has stirred the biggest crisis in Russia's relations with the West since the Cold War.

"In terms of actions, we've seen aggression and appeals to national sentiments that have historically been very dangerous in Europe and are rightly a cause of concerns," Mr Obama said.

"No realistic political settlement can be achieved if effectively Russia says we are going to continue to send tanks and troops and arms and advisers under the guise of separatists, who are not home grown, and the only possible settlement is if Ukraine cedes its territory or its sovereignty."

Hours after the ceasefire announcement loud artillery explosions rocked the outskirts of the eastern Ukrainian city of Donetsk.

A Reuters correspondent said the blasts could be heard in the north-west of the city, home to about 1 million people before the conflict began, and dark grey smoke was billowing from an area near the city airport.

The German government said it did not have confirmation of a ceasefire between Russia and Ukraine so a timeline on further sanctions against Russia agreed by European leaders last weekend is still valid.

"We have no real confirmation of what was really or possibly agreed there and what that would affect and how that would actually be implemented. So we're sticking to the timeframe the European Council agreed on Saturday," government spokesman Steffen Seibert said. 

AFP, Reuters