Russia said Saturday its troops had withdrawn from the town of Lyman in eastern Ukraine to avoid being surrounded by Ukraine's army.

"In connection with the creation of a threat of encirclement, allied troops were withdrawn from the settlement of Krasny Liman to more advantageous lines," the defense ministry said, using the Russian name of the town.

Ukraine's capture of Lyman, which has served for months as a logistics and transport hub for Russian operations, marked a major defeat for Moscow, a day after President Vladimir Putin proclaimed the annexation of four Ukrainian regions. These include Donetsk, where Lyman is located.

The ministry said in a statement Russia had inflicted serious losses on the Ukrainian forces by launching "massive fire strikes" against them. It did not provide evidence, and the claim could not be independently verified.

"Despite the losses suffered, the enemy, having a significant superiority in forces and means, introduced reserves and continued the offensive in this direction," it said.

Ukrainian soldiers clambered onto a vehicle waving the national flag on Saturday. In a video posted on social media by the president's chief of staff, Andriy Yermak, the soldiers unfurled the flag and said "Lyman will be Ukraine," before taping the flag onto what appeared to be the "Lyman" welcome sign on the way into the town.

Lyman is key logistics hub in the eastern Donetsk region. Kyiv said Ukrainian forces reached the entrance of the eastern bastion of Lyman on Saturday after encircling thousands of Russian troops, in a battlefield rebuttal to the Kremlin a day after it proclaimed a swathe of territory to be part of Russia.

The capture of Lyman would be a major setback for Russia after President Vladimir Putin proclaimed the annexation of the Donetsk region, along with three other regions, at a ceremony in Moscow on Friday condemned by Kyiv and the West as a farce.

Russia has used Lyman as a logistics and transport hub for its operations in the north of the Donetsk region. Its fall would be Ukraine's biggest battlefield gain since a lightning counteroffensive in the northeastern Kharkiv region last month.

The Ukrainian military spokersperson said the capture of Lyman would allow Kyiv to advance into the Luhansk region, whose full capture Moscow announced at the beginning of July after weeks of slow, grinding advances.

Putin staged a grand ceremony in the Kremlin on Friday to celebrate the annexations of four territories controlled by his army.

"I want to say this to the Kyiv regime and its masters in the West: People living in Lugansk, Donetsk, Kherson and Zaporizhzhia are becoming our citizens forever," Putin said. President Joe Biden condemned Friday's ceremony in Moscow as a "sham routine" and pledged to continue backing Kyiv.

On Saturday, Ukrainian forces were on the doorstep of Lyman town in Donetsk, which Moscow's forces pummelled for weeks to capture this spring.

Ukraine's army said Saturday that it had "encircled" a Russian grouping near the eastern town, estimating it to be around 5,000 troops.

The governor of the neighbouring Lugansk region, Sergiy Gaiday, said the surrounded soldiers have three options: "try to break through, all die together or surrender."

The Kremlin-backed leader of Donetsk said Friday that Russian troops and their allies were holding on to Lyman with "their last strength".

The four annexed territories create a crucial land corridor between Russia and the Crimean Peninsula, annexed by Moscow in 2014.

Together, the five regions make up around 20% of Ukraine, where Kyiv in recent weeks has been clawing back territory.

'Illegal and illegitimate' annexation

Washington announced "severe" new sanctions against Russian officials and the defence industry, and said G7 allies support imposing "costs" on any nation that backs the annexation.

Ukrainian President Volodymyr Zelenskyy immediately urged the U.S.-led military alliance NATO to grant his country fast-track membership.

He also vowed never to hold talks with Russia as long as Putin was in power.

NATO chief Jens Stoltenberg slammed the annexation as "illegal and illegitimate" but remained non-committal after Ukraine said it was applying to join the Western alliance.

The United States and Canada voiced support for Ukraine's membership but steered clear of promises to fast-track it.

Turkey said Saturday Russia's annexation was a "grave violation of the established principles of international law".

Despite warnings from Putin prior to the annexation that he could use nuclear weapons to defend the captured territories, Ukraine's Foreign Minister Dmytro Kuleba said Kyiv would "continue liberating our land and our people".

Kuleba also said Ukraine brought the annexations to the International Court of Justice and urged the Hague-based court to hear the case "as soon as possible".

Nuclear plant boss detained

National Security Advisor Jake Sullivan said Friday that Washington would announce an "immediate" new weapons shipment for Kyiv next week.

Sullivan also said that while there is a "risk" of Putin using nuclear weapons, there is no indication he would do so imminently.

On Saturday, Ukraine's nuclear agency said a "Russian patrol" detained the director general of the Moscow-held Zaporizhzhia nuclear power plant.

Ihor Murashov was leaving the plant Friday when he was detained and "driven in an unknown direction" while blindfolded, Energoatom said.

Zaporizhzhia – Europe's largest nuclear energy facility – has been at the centre of tensions in recent weeks after Moscow and Kyiv accused each other of strikes on and near the plant, raising fears of an atomic disaster.

Russia on Friday vetoed a U.N.Security Council resolution condemning the annexation of the regions, while China, India, Brazil and Gabon abstained.

Although Russia's veto was a certainty, Western powers had hoped to demonstrate Moscow's growing isolation on the world stage and will now take the condemnation effort to the General Assembly, where every nation has a vote and none can kill a resolution.

At a UNESCO meeting Friday in Mexico City, representatives of dozens of countries walked out as Russia took the floor, symbolically condemning the invasion of Ukraine.

Information from Reuters, AFP and The Associated Press contributed to this report.