Pro-Russian separatists in Ukraine have evacuated the city of Sloviansk, a crucial eastern stronghold, amid a large-scale offensive by the military.
Separatists said the "overwhelming numerical superiority" of the army had forced them to relocate to Kramatorsk.
Troops have hoisted the Ukrainian flag over Sloviansk's council building, and officials said soldiers were mopping up the last outposts of rebel resistance.
Two smaller towns are also reported to have been retaken by government troops.
Ukrainian forces launched an offensive against the separatists this week after a 10-day ceasefire broke down.
The BBC's David Stern in Kiev says the military's capture of Sloviansk - where the eastern insurgency began in April - is a major victory for the government.
Analysis: David Stern, BBC News, Kiev
Of the government's victories so far, the retaking of Sloviansk and raising of the Ukrainian flag over city hall is by far the most significant. The city was not just a command centre for the insurgency - it was a symbol of the militants' continuing ability to thwart Kiev's attempts to reassert control in the east.
Now, it appears that the insurgents may also be evacuating Kramatorsk, another key city. But the question is whether this is a turning point in the war, or merely a shifting of the battlefield.
The rebels are calling this a tactical retreat, which is typically a euphemism for a defeat. But if they are moving en masse to Donetsk, it could still present a major military challenge to government forces. It could also convince the rebels to engage in ceasefire talks more actively - if only to buy more time.
No will to fight
Both government officials and rebel leaders confirmed that the separatists had left Sloviansk.
Alexander Borodai, prime minister of the self-proclaimed Donetsk People's Republic, said on a rebel website: "Due to the overwhelming numerical superiority of the enemy our men were forced to abandon their positions."
Rebels were quoted as saying they had pulled back to the nearby city of Kramatorsk.
But witnesses reported seeing dozens of rebels abandoning checkpoints in Kramatorsk, apparently heading for the main city of Donetsk.
Rebel leaders were quoted as saying the decision to abandon Sloviansk was taken by Igor Strelkov, the military commander of the self-declared Donetsk Peoples' Republic (DPR).
Mr Strelkov, whose real name is Igor Girkin, had pleaded for Russian intervention on Friday saying his men had lost the will to fight.
Who is Igor Strelkov?
- Real name Igor Girkin, self-declared commander-in-chief of Donetsk People's Republic
- Ukraine says he works for Russian military intelligence agency the GRU
- On list of EU sanctions for posing threats to Ukraine's independence
- Noted for love of re-enacting Roman, Napoleonic and 20th Century battles
There has been intense diplomatic activity this week to try to reinstate the ceasefire, with telephone calls involving Germany, France, the US, Russia and Ukraine.
Ukrainian President Petro Poroshenko said he was ready to return to a ceasefire provided it was observed by both sides, all hostages were freed and borders secured by government forces.
Our correspondent in Kiev says talks to try to end the fighting were supposed to begin on Saturday, but so far no meeting has been announced.
Mr Poroshenko called off a unilateral truce on 30 June, accusing the rebels of staging deadly attacks on Ukrainian government troops.
Violence erupted in eastern Ukraine in April, when separatists declared independence in the Donetsk and Luhansk regions.
That followed Russia's annexation of Ukraine's Crimea.
The current Ukraine crisis started last November, when then President Viktor Yanukovych decided, under pressure from Russia, not to sign an agreement with the EU, leading to street protests in Kiev and his eventual overthrow.
President Poroshenko signed the free trade part of the EU deal in Brussels on 27 June, after earlier signing the political co-operation clauses.