Ukrainian forces perform victory dance after liberating eastern city of Lyman

Russia suffered a humiliating military defeat on Saturday when Ukrainian troops liberated the key eastern city of Lyman, with videos showing them raising a blue and yellow national flag and performing a victory dance.

In a severe embarrassment for Vladimir Putin, Russia’s ministry of defence admitted its soldiers had retreated. They had been “withdrawn to more advantageous lines”, the ministry said, after their encirclement by Ukrainian forces.

The debacle came hours after Putin announced on Friday that the city, which is a part of the Donetsk region, was Russia’s “for ever”. In a ceremony in the Kremlin he announced the province’s annexation, together with the territories of Luhansk, Kherson and Zaporizhzhia.

But Putin’s high-stakes strategy appeared to be unravelling on the battlefield. Russian nationalist bloggers vented their fury at the military command in Moscow, while Chechnya’s president, Ramzan Kadyrov, published a scathing critique of its many failures.

Writing on Telegram, Kadryov called on the Kremlin to consider using a “low-yield nuclear weapon” in the wake of its Lyman setback. He asked sarcastically what cities Russia might lose next, adding: “Everything would be good if it wasn’t so bad.”

Related: Russia-Ukraine war latest: what we know on day 220 of the invasion

Earlier on Saturday Ukraine’s armed forces said they had entirely surrounded the city, trapping thousands of Russian soldiers inside. The governor of Luhansk province, Serhiy Haidai, said the besieged troops had begged on Friday to be allowed to leave Lyman. Their commanders refused, he claimed.

With no way out, the Russians could either surrender, try to escape or die together, Haidai said. “A colossal grouping” of up to 5,000 enemy soldiers was facing defeat, he added. Ukrainian drone footage from Friday showed a column of vehicles heading west, together with civilian vehicles.

Russian military bloggers reported that Ukrainian servicemen had entered the centre of the city, and were handing out food to residents. Shelling and small arms fire had stopped.

“Whatever promises there were to send us reinforcements never materialised,” one admitted. Mobile phone footage showed Ukrainian soldiers walking calmly over a destroyed bridge near the village of Torske.

Ukrainian forces also liberated several other surrounding settlements including Yampil, south of Lyman, Novoselivka, Shandrigolovo and Drobysheve. Video from Shandrigolovo showed Ukrainian soldiers pulling down the Russian tricolour. They threw it to the ground and stamped on it.

The Kremlin’s debacle in Lyman followed a series of dramatic advances by Ukrainian forces. Last month they almost completely liberated the north-eastern Kharkiv region. On Saturday its governor, Oleh Synyehubov, said Russia had shelled a civilian evacuation convoy, killing 20 people. They had been fleeing from Kupiansk, a town about 3.5 miles (6 km) from the frontline.

The attack appears to have happened several days ago. The victims reportedly included several children. Footage showed bodies slumped in cars and the skeletons of two passengers sitting in front seats who appear to have been incinerated. Synyehubov said Moscow was guilty of “cruelty that can’t be justified”.

On Thursday Russian troops attacked another convoy waiting to enter Russian-controlled territory in Zaporizhzhia, killing 30 civilians, including two children, and wounding dozens.

In recent days Ukrainian battalions pushed further into occupied territory around Lyman. On Saturday Russia’s defences crumbled. It was unclear how many Russian-armoured vehicles managed to escape. Video showed the apparent aftermath of an artillery strike, with burnt-out vehicles by the side of a forest road, personal belongings strewn in the mud and dead Russian soldiers.

The rapid Ukrainian counteroffensive appears to have triggered Putin’s speech on Friday, when he announced that Donetsk, Luhansk, Kherson and Zaporizhzhia oblasts were now irrevocably part of Russia, after so-called “referendums” last week. The Kremlin controls almost all of Luhansk and Kherson provinces, but only parts of the other two regions.

The UN, the US, UK and other western nations have condemned Russia’s attempted annexation as illegal and meaningless. Ukraine’s president, Volodymyr Zelenskiy, has said Kyiv will liberate all of its territory including Crimea. On Friday he formally applied for Ukraine to join Nato as soon as possible.

The Kremlin has not commented on its stunning military rout in Lyman. Ukrainian commentators pointed out gleefully that Putin was the first invader in world history to announce the annexation of new territory at the same moment his troops were retreating from it.

In Friday’s rambling and grudge-filled speech Putin denounced the west and portrayed his invasion of Ukraine as a just and necessary response to an attempt by the US and its allies to “colonise” Russia. He promised to “protect” the newly annexed lands “with all the forces at our disposal”.

Zelenskiy has shrugged off Putin’s nuclear threats and made clear negotiations would only be possible with a new Russian leader.

On Saturday he tweeted his thanks to President Biden, and to bipartisan legislators in Washington, for the US’s latest $12.3bn support package for Ukraine.

It includes 18 additional Himars long-range artillery systems. The high-precision weapon has played a critical role in Ukraine’s recent successful offensives, in the east and in the south around the occupied city of Kherson, where the Ukrainian army is squeezing fortified Russian positions.

Meanwhile, the International Atomic Energy Agency (IAEA) said it was seeking information following reports that a Russian patrol had abducted the head of the Zaporizhzhia nuclear power plant, which Moscow has occupied since March. Igor Murashov disappeared on his way to work on Friday. His whereabouts are unknown.

Unverified reports suggested the Russians were seeking to force Murashov to work for Rosatom, Russia’s state nuclear energy agency. He and about 7,000 other Ukrainian staff at the plant are employed by Energoatom, Ukraine’s nuclear organisation, based in Kyiv.

The plant’s six reactors are in cold storage. Rosatom experts sent from Moscow have been trying to connect the station with the Russian power grid, in order to supply energy to Crimea. “We have contacted Russian authorities and are requesting clarifications,” a IAEA spokesperson said.

The sudden collapse of Russia’s forces in Lyman opens up the possibility of further Ukrainian gains. Ukrainian battalions can push north towards the town of Svatove or east to Kreminna, Haidai, the Luhansk governor, said. Beyond that are a cluster of cities which Russia seized over the summer after long pulverising battles – Sievierodonetsk, Rubizhne and Lysychansk.

In its Kharkiv region offensive Ukraine’s eastern command captured dozens of armoured vehicles left behind by fleeing Russians including T-90 tanks, fuel trucks, and mortars. It was unclear how much Russian equipment had been left behind in Lyman.