Russian defence minister Sergei Shoigu has ordered the country's troops to withdraw from the western bank of the Dnipro River in Ukraine's Kherson region.
Ukrainian authorities did not immediately confirm the move – and President Volodymyr Zelensky has suggested that the Russians were feigning a pullout from Kherson in order to lure the Ukrainian army into an entrenched battle.
Mr Zelensky called attempts to convince civilians to move deeper into Russian-controlled territory "theatre".
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The top Russian military commander in Ukraine, General Sergei Surovikin, reported to the Russian defence minister that it was impossible to deliver supplies to the city of Kherson and other areas on the western bank.
Mr Shoigu reportedly agreed with his proposal to retreat and set up defences on the eastern bank.
The withdrawal from the city of Kherson is a major setback for Russia – it is the only regional capital Russian forces had seized during the eight-month war.
John Spencer, a retired US Army Major and urban warfare expert, said on Twitter: "A great day for Ukraine. Kherson city is being liberated. The only regional capital Russia was able to seize the entire war. A major loss for Russia."
The city, with a pre-war population of 280,000, is the only regional capital to be captured by Russian forces since the invasion began on 24 February.
Ukrainian forces had zeroed in on the strategic industrial city, which sits on the Dnieper River that divides the region and the country itself.
During the summer, Ukrainian troops launched relentless attacks to reclaim parts of the larger province.
More than 70,000 residents were evacuated in late October, along with members of the Kremlin-installed regional government, according to the Moscow-appointed officials, although Ukrainian officials questioned the claim.
The city and parts of the surrounding region were seized in the opening days of the conflict as Russian troops pushed their attack north from Crimea – the area illegally annexed by the Kremlin in 2014.