The fall of the small hilltop town is a worrying prospect for Ukraine.
Ukraine said Thursday its forces had withdrawn from a district in the key eastern town of Chasiv Yar, where Russian forces have recently claimed several advances.
The fall of the small hilltop town is a worrying prospect for Ukraine because it would likely accelerate Russian advances towards large civilian hubs in the wider eastern Donetsk region.
"It became impractical to hold the Kanal district, which the enemy had entered because it threatened the lives and well-being of our soldiers," a Ukrainian military spokesman said on state-run television.
"Our defenders' positions had been destroyed. The command decided to retreat to better protected and prepared positions," Nazar Voloshyn added.
Russia had said earlier this week that its forces had advanced around Chasiv Yar but it was unclear if it was claiming its forces had crossed a canal that runs through the eastern part of the town.
Chasiv Yar -- a prized military hub that was once a sleepy home to some 12,000 people -- lies near the larger towns of Kostyantynivka and Kramatorsk, which are both important military centres, too.
The Kremlin says the industrial Donetsk region is part of Russia and the region has borne the brunt of fighting after Russian forces invaded Ukraine in February 2022.
Kremlin-supported separatist forces have controlled parts of Donetsk since 2014.
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