Russian forces threatened to encircle a crucial eastern Ukrainian city on Wednesday as Moscow said the West must drop sanctions to end a global food crisis.

Ukrainian officials said fierce fighting had reached the edge of the industrial hub of Severodonetsk, under relentless bombardment by Russian forces trying to seize control of the Donbas region.

Ukraine's President Volodymyr Zelenskiy called for more Western support for his outgunned troops as the Russian campaign entered its fourth month, while his foreign minister blasted Nato for doing "nothing".

Kyiv meanwhile accused Moscow of "blackmail" over its proposal to allow grain exports if the West lifts sanctions, as the war between two of the world's big wheat producers creates growing food shortages.

The governor of the eastern Ukrainian region of Lugansk, Sergiy Gaiday, described the situation around of Severodonetsk as "very difficult" and said there was "already fighting on the outskirts".

"Russian troops have advanced far enough that they can already fire mortars" on the city, he said.

Western funds and weapons have helped Ukraine hold off its neighbour's advances in many areas, including the capital Kyiv.

But Russia is now focused on expanding its gains in eastern Donbas, home to pro-Russian separatists, as well as the southern coast. Donbas comprises Lugansk and the region of Donetsk.

"Solving the food problem requires a comprehensive approach, including the removal of sanctions that have been imposed on Russian exports and financial transactions," said Russian deputy foreign minister Andrey Rudenko.

Ukrainian Foreign Minister Dmytro Kuleba urged the West not to give in.

"This is clear blackmail. You could not find a better example of blackmail in international relations," Kuleba said at the World Economic Forum in Davos.

Kuleba also slammed Nato for "doing literally nothing" to stop Russia.(AFP)