Ukraine said it had retaken full control of a key eastern city on Sunday, handing the Kremlin another stinging setback just days after Russian President Vladimir Putin proclaimed that the area would belong to his country forever.

The recapture of Lyman represents a symbolic and strategic victory for Kyiv, which vowed its forces would push deeper into occupied territory after forcing Moscow's military into its latest bloody and humiliating retreat. Western officials and observers said Russia’s loss of a logistics hub key to the supply of forces in the south and east was a significant development that could pave the way for more.

"Lyman is cleared fully," Ukrainian President Volodymyr Zelenskyy announced early Sunday, hours after Russia's Defense Ministry said it was withdrawing its troops to more favorable defensive positions after facing likely encirclement.

“Over the past week, the number of Ukrainian flags in Donbas has increased. There will be even more in a week’s time,” Zelenskyy said on Saturday in an evening address.

Lyman is in the Donetsk region, which together with neighboring Luhansk makes up Ukraine's eastern industrial heartland of the Donbas. Putin illegally claimed the areas, as well as the partially occupied southern regions of Zaporizhzhia and Kherson, at a grand Kremlin ceremony on Friday that drew global condemnation.

His military's fragile grip on that supposedly annexed territory and Moscow's increasing nuclear threats have stoked fears of escalation beyond Putin's move to call up military reservists.