The United States stepped up warnings of an imminent Russian invasion of Ukraine on Thursday, despite Moscow's continued denials and announcements of troop withdrawals from near the border.

Adding to the already fierce tensions, Ukraine and Moscow-backed separatists traded accusations of intensifying shell fire across their frontline, with Western officials saying Moscow was looking to create a pretext for an invasion.

The threat of an invasion is "very high, because they have not moved any of their troops out. They've moved more troops in," US President Joe Biden told reporters at the White House.

"Every indication we have is that they're prepared to go into Ukraine," he said, accusing Moscow of preparing a "false flag operation" as a pretext to invade.

The Ukrainian army has carried out military drills amid fears of a Russian invasion
The Ukrainian army has carried out military drills amid fears of a Russian invasion AFP / Aris Messinis

"My sense is it will happen in the next several days," Biden said.

At the United Nations, where the Security Council was set for a heated meeting on the crisis, the US envoy said Washington wanted to make clear that risk of a war in Europe was growing.

"Our goal is to convey the gravity of the situation. The evidence on the ground is that Russia is moving toward an imminent invasion. This is a crucial moment," Linda Thomas-Greenfield tweeted ahead of the meeting.

Russia bolsters military deployment on the borders with Ukraine
Russia bolsters military deployment on the borders with Ukraine AFP / Patricio ARANA

Russia meanwhile responded to previous US security proposals aimed at defusing the crisis, insisting it was not planning any invasion but making clear that it felt its key demands were being ignored.

"In the absence of will on the American side to negotiate firm and legally binding guarantees on our security from the United States and its allies, Russia will be forced to respond, including with military-technical measures," the foreign ministry said.

"We insist on the withdrawal of all US armed forces in Central Europe, Eastern Europe and the Baltics," it added.

Russia also expelled the number two US diplomat in Moscow, the US State Department said, condemning what it called an "unprovoked" action.

Russia has launched joint exercises in Belarus involving ground and air forces
Russia has launched joint exercises in Belarus involving ground and air forces Russian Defence Ministry via AFP

Ukraine has been in conflict with Moscow-backed rebels in the eastern Donetsk and Lugansk regions since 2014, in a war that has cost thousands of lives

The Ukrainian army accused Russian-backed separatists of 34 ceasefire breaches on Thursday, 28 of them using heavy weapons.

It said that two Ukrainian soldiers and five civilians had been injured, including three adults wounded by artillery fire that hit a kindergarten in the village of Stanytsia-Luganska while children were inside.

"The shelling of a kindergarten... by pro-Russian forces is a big provocation," President Volodymyr Zelensky said on Twitter.

Russian news agencies meanwhile quoted authorities in the separatist Lugansk region saying they blamed Kyiv after the situation on the frontline "escalated significantly".

Residents on the Ukrainian border with Belarus fear they will be caught up in a battle between great powers
Residents on the Ukrainian border with Belarus fear they will be caught up in a battle between great powers AFP / Sergei SUPINSKY

There were no immediate reports of deaths, and clashes involving artillery and sniper fire are common along the frontline, but any significant increase in fighting could be the spark to ignite a wider conflict.

The United States has claimed Moscow could be looking for a pretext to invade and earlier this week Russian President Vladimir Putin claimed that Kyiv was committing "genocide" in the eastern Donbas region.

US Defense Secretary Lloyd Austin described Thursday's reports as "troubling".

"We've said for some time that the Russians might do something like this in order to justify a military conflict. So we'll be watching this very closely," Austin told journalists after a meeting with NATO counterparts.

"We have been warning of the likelihood of a false flag operation and that is what we are seeing taking place," British Foreign Secretary Liz Truss said on a visit to Kyiv.

"Russia can still take the path of diplomacy. They can de-escalate, they can move their troops away from the border," she said.

British Prime Minister Boris Johnson said the kindergarten shelling was "a false flag operation designed to discredit the Ukrainians," without explaining how an alleged attack by separatists on Ukrainian soil could discredit Kyiv.

Western officials say Russia has amassed well over 100,000 troops and significant military hardware near Ukraine's borders in preparation for a potential invasion.

Russia has said "large-scale" military exercises are taking place in various areas, including near Ukraine, but has not provided any specific numbers and has repeatedly denied any plans for an attack.

Moscow has made several announcements of troop withdrawals this week and on Thursday said that units of the southern and western military districts, including tank units, had begun returning to their bases from near Ukraine.

Defence ministry spokesman Igor Konashenkov said some troops had returned to their garrisons in several areas far from the border, including Chechnya and Dagestan in the North Caucasus, and near Nizhny Novgorod, some 300 kilometres (185 miles) east of Moscow.

After previously announced withdrawals earlier this week, the United States, NATO and Ukraine all said they had seen no evidence of a pullback, with Washington saying Russia had in fact moved 7,000 more troops near the border.

Russia has blamed the West for provoking the tensions, saying Washington and its European allies have for too long ignored Moscow's security concerns on its doorstep.

Putin has demanded that Ukraine be forever banned from fulfilling its hopes of joining NATO and for the alliance to roll back its deployments near Russia's borders.

Zelensky said Thursday his country was not looking for foreign forces within its borders.