The chief of the Organisation for Security and Co-operation in Europe says a truce is holding in a key village in eastern Ukraine and is urging rival sides to "embrace a good chance for peace" in the war-torn region.

"The news this morning is that our people, our monitors have brokered a truce in Shyrokyne, down near Mariupol," OSCE secretary general Lamberto Zannier said.

"And this truce seems to be holding," he said during a visit to Lithuania's capital Vilnius.
The OSCE in Europe sent a monitoring mission to Ukraine in March 2014.

Close to the strategic port of Mariupol, Shyrokyne has been the latest flashpoint in a year-long conflict that has left more than 6000 people dead.

Zannier said there were still challenges ahead to secure peace but added that "all in all the situation is better than it was few weeks back".

"There is a good chance for peace at this moment and we need to invest as much as we can in this. But there is always a risk of relapse in the conflict," Zannier said.

In February, leaders of France, Germany, Russia and Ukraine brokered the so-called Minsk II truce between pro-Russian rebels and Ukrainian government forces in the east of the former Soviet state.

The United States and the 28-member European Union insist its full implementation is a key prerequisite for the lifting of sanctions against Russia imposed after its March 2014 annexation of Crimea and alleged meddling in eastern Ukraine.

"Heavy weapons have been largely withdrawn" from the agreed truce line in the conflict zone, Zannier said, adding that the focus could shift on "withdrawing other categories of smaller weapons because they are still actively used in this violations of the ceasefire".