Rebels forces have been gaining ground
Pro-Russian separatist leader Alexander Zakharchenko says rebels aim to boost their forces to 100,000, as fighting with Ukraine's military intensifies.
The rebels want to push government forces out of the eastern regions of Donetsk and Luhansk and are trying to capture the key town of Debaltseve.
Dozens of people including civilians were killed in clashes and artillery fire at the weekend.
Attempts to agree a truce failed when rebel negotiators did not turn up.
Denis Pushilin, a rebel representative, said rebels would only return to negotiations if the government declared a unilateral ceasefire.
A fragile ceasefire agreed in early September in the Belarusian capital, Minsk, collapsed last month when rebels stepped up their offensive in several areas and seized Donetsk airport.
Both sides have blamed each other for dozens of recent civilian deaths resulting from the fighting.
Armoured vehicles were seen heading for Debaltseve on Sunday to bolster Ukrainian forces
The conflict in Ukraine has killed more than 5,000 people. Here, a funeral in Kiev on Monday
Mr Zakharchenko, the head of the self-proclaimed Donetsk People's Republic, said mobilisation was "urgent" and that the call-up would take place in the next 10 days.
"This is to increase our army to 100,000 people," he said. "It does not mean we will take in 100,000, but the joint army of Donetsk and Luhansk People's Republics' army should be 100,000."
However, the rebels' ability to raise large numbers of forces is unclear.
The first question that springs to mind, after Alexander Zakharchenko's mobilisation announcement, is where all these fighters will come from. The territory of the self-declared Donetsk and Luhansk People's Republics had a pre-war population of a few million, and it is unclear how many people remain.
So it could be political bluster - an attempt to match rhetorically the Ukrainian government's own mobilisation plans. However, it should be noted that Kiev plans to carry this out over the course of the year and not, like the separatists, in little more than a week.
But Mr Zakharchenko's statement could indicate something much more serious. The rebels have already threatened a full-scale offensive, promising to push to the borders of the Donetsk and Luhansk regions, and possibly beyond. This most likely would require a huge number of forces. Many in Kiev are now concerned the Donetsk leader may be preparing the ground for major intervention from Ukraine's neighbour, Russia.
Human cost of conflict mounting
Why is violence surging?
Mr Zakharchenko said new recruits would have a month's training and would form at least five additional brigades: three motorised rifle brigades, one artillery brigade and one tank brigade.
"This is the reserve which will guarantee us an ability to withstand any attack, and in case of success, to develop a counter-attack," he said.
Ukraine's government has also announced a major mobilisation, with plans to bring the numbers in its armed forces to 200,000 in 2015.
The US, which has so far only provided non-lethal aid to Ukraine, is now considering providing arms, the New York Times reported on Monday.
US President Barack Obama had originally been firmly opposed to arming the Ukrainian military, fearing a proxy battle between the US and Russia, a position that now appears to be shifting, the BBC's Jon Sopel reports from Washington.
German Chancellor Angela Merkel said her country would not offer such support, adding that it was counting on sanctions and diplomacy. "This crisis cannot be solved militarily," she said.
'Significant losses'
Ukraine has alleged the rebels are being helped by as many as 9,000 Russian servicemen, a claim the government in Moscow denies.
Tanks and other heavy military vehicles were seen heading towards Debaltseve on Sunday in an attempt to bolster government defences.
Government forces evacuated hundreds of civilians amid reports that separatists had reached the outskirts.
A Canadian journalist in the area said rebels had been involved in a tough battle.
"It's been quite surprising to hear how many have said they are experiencing significant losses and many of their fellow fighters have been killed," Kristina Jovanovski told the BBC World Service Newsday programme.
Russian President Vladimir Putin is "extremely concerned" by the situation, his spokesman said.
Military officials in Kiev said on Monday that five soldiers had been killed in the past 24 hours, although separatists said the number was more than 20. Fifteen civilians were killed in the rebel-held city of Donetsk over the weekend, rebel sources said.
Overall, more than 5,000 people have been killed and some 1.2 million have fled their homes since last April, when the rebels seized a big swathe of Luhansk and Donetsk regions, following Russia's annexation of Crimea.
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