Kyiv troops withdrew from the eastern city of Avdiivka to avoid encirclement, Ukraine army chief Oleksandr Syrskyi said in a Facebook post on Saturday.
The withdrawal, announced as Ukraine faces acute shortages of ammunition with US military aid delayed for months in Congress, aimed to save troops from being fully surrounded by Russian forces after months of fierce fighting, Kyiv said.
General Oleksandr Syrskyi, who took the helm of the Ukrainian military in a major shakeup last week, said Ukrainian forces had moved back to more secure positions outside the town that had a pre-war population of 32,000.
"I decided to withdraw our units from the town and move to defence from more favorable lines in order to avoid encirclement and preserve the lives and health of servicemen," he was quoted as saying in an armed forces statement.
The loss of the town nearly two years into Russia's full-scale invasion may give President Volodymyr Zelenskiy a stronger case to make to the West for more urgent military aid as he addresses the Munich Security Conference on Saturday morning.
US President Joe Biden had said on Thursday that Avdiivka risked falling to Russian forces because of ammunition shortages following months of Republican congressional opposition to a new US military aid package for Kyiv.
Capturing Avdiivka is key to Russia's aim of securing full control of the two provinces that make up the industrial Donbas region, and could hand President Vladimir Putin a battlefield victory as he seeks re-election next month.
Avdiivka has borne the brunt of mounting offensive pressure by Russian forces in the east as wavering Western military aid has compounded the fatigue of troops fighting for almost two years.
"We are taking measures to stabilize the situation and maintain our positions," Syrskyi said.