Oleksandr Stryuk, the mayor of Severodonetsk, spoke to Ukrainian TV on Saturday after weeks of intense Russian shelling left the city largely in ruins.
As many citizens had taken refuge at the enormous Azot chemical factory, the mayor claimed that the only path out of the city was across Russian-controlled territory.
Oleksandr Stryuk said on Ukrainian TV, "The Russians have completely captured Severodonetsk. Our force has retreated to more prepared positions."
Rebels who support Russia and are affiliated with the Russian military claim to have occupied several areas of Lysychansk.
Severodonetsk, a city with a 100,000-person population, has experienced violent street fighting, and the majority of its citizens have left.
The two districts that make up the industrial Donbas have also been captured by Russian forces, including more than half of neighbouring Donetsk.
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