Ukrainian fighters have done a "very successful job of wearing down" the Russians in the Lysychansk area before retreating, an intelligence expert has told Sky News.
Lysychansk was the last remaining major city in the eastern Luhansk region under Ukrainian control which has now fallen under Russian control.
Former British army intelligence officer Forbes McKenzie said it was not crucial for the Ukrainians to retain control of Lysychansk to win the war.
He said: "They have quietly moved out of Lysychansk over the weekend. It wasn't broadcast that they were going to do that.
"They've done a very successful job of tactically wearing down the Russians in that area. Lysychansk is not key - they don't need to own that city in order to win the war.
"What they have done is very successfully worn down the Russians and then they've retreated.
"There's a road that goes from Slovyansk to Bakhmut. It's assessed that the Ukrainians will move to the west side of that road where they'll dig in and then prepare for the next attack."
'Probing attacks to the north'
Mr McKenzie said the next phase will determine what action the Russians take.
He added: "The Russians we see are doing probing attacks to the north.
"We see activity taking place from the Russians now which will set conditions for what they may do next.
"But I think it's worth well saying the Russians are worn down. They've had real problems with force generation.
"The (British) general chief of defence staff Patrick Saunders talks about the amount of munitions, that are being fired in 48 hours, could deplete a typical NATO country.
"A lot is going on and a lot needs to take place for the next phase."
But he said any ambition for the Ukrainians to regain Lysychansk would "physically need troops on the ground and that takes a lot of effort".
The latest intelligence report from the UK's Ministry of Defence said fighting in and around the Luhansk region had "intensified" over the past week.
It added that with the withdrawal of Ukrainian forces from Lysychansk, Russia will "almost certainly" switch to capturing the Donetsk region.