The clashes - said to involve heavy artillery and tanks - took place in Maryinka and Krasnohorivka, outside the rebel-held city of Donetsk.
There were many reports of injuries in the towns held by Ukraine's army.
Ukraine accused the rebels of launching a full-scale offensive in violation of a truce. The separatists deny this.
The BBC's Tom Burridge near Maryinka describes the fighting as the heaviest since the ceasefire signed in February in Minsk, Belarus.
Clashes between government troops and the rebels have recently intensified along the line of separation.
The Ukrainian government, Western leaders and Nato all say there is clear evidence that Russia is helping the rebels in the Donetsk and Luhansk regions with heavy weapons and soldiers. Independent experts echo that accusation.
Moscow denies it, insisting that any Russians serving with the rebels are volunteers.
More than 6,400 people have been killed in fighting in eastern Ukraine that began in April 2014 when rebels seized large parts of the two eastern regions. This followed Russia's annexation of the Crimea peninsula.
In other developments:
- two civilians were killed by mortar fire in the Ukraine-held part of the Luhansk region, Governor Hennadiy Moskal says
- rebels say 15 people were killed on the territory under their control
- Kremlin spokesman Dmitry Peskov says Russia disagrees with the term "annexation" of Crimea used in a recent speech by German Chancellor Angela Merkel, Russia's Itar-Tass news agency reports; Moscow insists that Crimea was "reunited" with Russia
'Provocation'
Ukrainian officials say the clashes in Maryinka and Krasnohorivka, just west of Donetsk, began with heavy artillery shelling by the rebels early on Wednesday morning.
At least seven government soldiers were wounded during the intense fighting, government sources said.
Ukraine's military later accused the rebels of staging a full-scale offensive, in violation of the Minsk agreements.
It said more than 10 tanks and up to 1,000 rebel fighters had attacked Ukrainian positions in Maryinka.
Ukrainian troops, it added, had been forced to use artillery to repel the offensive.
At the scene: BBC's Tom Burridge, near Maryinka
We could hear the battle rage around Maryinka, which is by a main crossing point from government-controlled eastern Ukraine into rebel-held territory.
There was a near constant barrage of artillery throughout the afternoon. Smoke rose on the horizon.
And on three occasions we saw Ukrainian troops fire multiple rocket launchers, known as Grads, towards rebel positions.
The Ukrainians also accused the rebels of using Grads, which indiscriminately shower a large area with rockets, and are banned from exclusion zones near the frontline, under the Minsk agreement.
The exact number of dead might only emerge with time, but both sides appear to have taken significant losses.
Who is now in control of Maryinka is unclear.
If Maryinka has been taken by the rebels, it would appear to be the most significant gain in territory since the Ukrainian military lost control of the town of Debaltseve, just after the Minsk deal was agreed.
Wednesday's violence will sow even more distrust and will shake the confidence of leaders and diplomats in France and Germany, who are trying to work with Russia and Ukraine to broker real peace.
Meanwhile, rebel leaders accused Ukraine of shelling across the line of contact.
"This is Kiev's local provocation, an attempt to break deep into the DPR [the self-proclaimed Donetsk People's Republic] from Maryinka. All of this is local, not large-scale combat clashes," rebel deputy defence minister Eduard Basurin was quoted as saying by Russia's Interfax news agency.
Rebel sources also reported on a number of injuries among their forces.
Maryinka - a strategically located town along a major road - has been devastated by months of heavy fighting.
The rebels have accused Ukrainian troops stationed in the town of repeatedly shelling Donetsk - a claim denied by the Ukrainian military.
Despite the ceasefire, rebel leaders have said they want to seize the parts of the Donetsk and Luhansk regions currently held by government forces.
Source BBC
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