A Ukrainian officer has been killed in a gun battle with pro-Russian armed men in the eastern city of Sloviansk, the interior minister says.
Both sides suffered a number of casualties, Arsen Avakov said.
Pro-Russian forces took over Sloviansk on Saturday and have targeted at least four other cities, prompting Kiev to launch an "anti-terror operation".
Kiev and Western powers accuse Moscow of inciting the trouble. The Kremlin denies the charge.
US officials said on Saturday there had been a "concerted campaign" by forces with Russian support to undermine the authorities in Kiev.
Secretary of State John Kerry warned of "additional consequences" if Russia failed to make efforts to "de-escalate" and pull its troops back from Ukraine's border.
But Russia's Foreign Minister Sergei Lavrov said the Kiev government was "demonstrating its inability to take responsibility for the fate of the country".
He had warned earlier that any use of force in eastern Ukraine could scupper crisis talks due later this week.
Meanwhile a Nato source told the BBC they believe that "Russian forces have been involved in the seizure of some of the buildings."
And the organisation's chief, Anders Fogh Rasmussen, said on Sunday it was a "grave development" that men had reappeared "with specialised Russian weapons and identical uniforms without insignia, as previously worn by Russian troops during Russia's illegal and illegitimate seizure of Crimea".
'Shooting to kill'
On Saturday, armed men took over police stations and official buildings in Sloviansk, Kramatorsk and Druzhkovka.
Unconfirmed reports suggested official buildings had also been taken over in two other cities - Mariupol and Yenakievo.
Similar accounts emerged from Sloviansk and Kramatorsk on Saturday of armed men dressed in camouflage arriving in buses and storming the police stations.
Pro-Russian demonstrators also continued their occupation of the main administrative building in the regional capital Donetsk, which they have held for one week.
A protest leader told the BBC that the activists in Sloviansk took action to support the Donetsk sit-in.
BBC reporters in Sloviansk said the gunmen were well-organised and quickly established control throughout the town.
Checkpoints had been set up on the main roads into the town.
Mr Avakov labelled the actions a "display of aggression by Russia".
Announcing the operation to clear the activists, he warned people to stay in their homes in Sloviansk.
"The separatists are shooting to kill without warning against the approaching special forces," he said,
He later said Ukrainian forces had been attacked at a checkpoint on the way to Sloviansk, and at least one officer had been killed and five others wounded.
An unknown number of militants were also wounded, he said.
Witnesses at the police station say there is not yet any sign of clashes, and the centre of the town is quiet.
Eastern Ukraine has a large Russian-speaking population and has seen a series of protests since the ousting of Ukraine's pro-Russian President Viktor Yanukovych in February.