STORY: Russian mercenary chief Yevgeny Prigozhin said on Saturday his Wagner fighters had completed the capture of Bakhmut.
Prigozhin made the claim in a video in which he appeared in combat fatigues in front of a line of fighters holding Russian flags and Wagner banners.
"Today, at 12 noon, Bakhmut was completely taken," he said.
Ukraine rejected the claim and said fighting was still going on.
Deputy Defence Minister Hanna Maliar described the situation in Bakhmut as "critical"
and said Ukrainian troops were maintaining a defense in the southwestern part of the city.
Bakhmut has been the focus of the longest and bloodiest battle of Russia's war in Ukraine, which is nearly at the end of its 15th month.
Distant explosions could be heard in the background as Prigozhin spoke during the video, in which he said his forces would withdraw from Bakhmut from May 25 for rest and retraining, handing control to the regular Russian army.
Prigozhin also taunted Ukrainian President Volodymyr Zelenskiy and U.S. President Joe Biden, who were taking part in a Group of Seven summit in Japan on Saturday where the Ukraine war was front of mind for world leaders.
Addressing Zelenskiy, Prigozhin said: "Today when you see Biden, kiss him on the top of his head, say hi to him from me."
Prigozhin repeated complaints he has frequently made in the past that his forces suffered far heavier losses than necessary because of inadequate support and ammunition supplies from the army.
Earlier this month he had threatened to pull his troops out after publishing a furious tirade against Defence Minister Sergei Shoigu while standing in a field of bloodied corpses.
His victory claim followed fierce fighting around the city in the past week in which Ukraine said it pushed back some Russian forces.