Ukraine’s President Petro Poroshenko says he has agreed with Russian President Vladimir Putin by phone on a "permanent ceasefire" with rebels.
"Their conversation resulted in agreement on a permanent ceasefire in the Donbass region [the regions of Donetsk and Luhansk]," his office said.
"They reached a mutual understanding on steps leading to peace."
The announcement comes as US President Barack Obama meets Baltic leaders in Estonia ahead of a Nato summit.
He is due to hold talks in the capital Tallinn with the presidents of Estonia, Latvia and Lithuania, all former Soviet states which joined Nato a decade ago.
The Nato summit in Wales is expected to back plans for a rapid response force.
More than 2,600 civilians and combatants have been killed and more than a million people have fled their homes since fighting erupted in eastern Ukraine in April, when pro-Russian separatists there declared independence.
Russia has denied accusations by the West and the Ukrainian government that it is sending troops and military equipment over the border to support the separatists, who recently gained the upper hand against government forces.
In another development, the death of a Russian photojournalist in Ukraine last month has been confirmed.
Rossia Sevodnya news agency photojournalist Andrei Stenin was killed on 6 August in a Ukrainian government ambush on a convoy of rebels and refugees near Donetsk, Russia’s Investigative Committee announced. His charred remains have only now been identified.