KIEV (AFP) - Ukraine's army said on Wednesday that it had retaken a town on the outskirts of the main rebel stronghold of Donetsk, and intercepted another convoy of vehicles crossing over from Russia.

Government forces said in a statement that they had seized control of Avdiyivka, a town of some 40,000 about a dozen kilometres north of Donetsk, as Kiev tightened its grip around the key insurgent bastion.

Meanwhile, fighting rumbled on in the area around the crash site of downed Malaysia Airlines flight 17, with government forces saying they were conducting a "mopping up" operation in the town of Ilovaysk, some 40km west of the downed jet.

The latest advances come as government troops attempt to push on with an offensive that has seen them reclaim a string of key towns in the past few weeks, and could see them cut alleged supply routes from Russia to rebels camped out in Donetsk.

The military said that they had repulsed tank fire to destroy a convoy of vehicles that crossed the Russian border early on Wednesday morning and that troops at the key Dovzhansky frontier post had been fired at from Russia.

There had been no casualties overnight, the statement said.

Meanwhile fighting also raged in the second rebel stronghold of Lugansk with local authorities saying that one civilian was killed and ten injured in clashes over the last 24 hours.