Petro Poroshenko, Ukraine's president, announced a week-long truce, but said the army would fight back in case of a separatist attack.
"The forces of the anti-terrorist operation will halt military action starting today and through June 27," Poroshenko was cited as saying in comments published on the Ukrainian Interior Ministry's website.
Shortly after the announcement, the Kremlin was quoted by the Russian news agencies as saying that the truce declaration sounded more like an ultimatum, Reuters reported.
Poroshenko said the ceasefire would give separatists time to lay down their arms and leave the country, to be followed by talks, new local elections and a jobs program.
Poroshenko discussed the details of his peace plan on the phone on Thursday with Vladimir Putin, Russia's president, and his office says he emphasized the need for introducing effective border controls and quickly releasing hostages seized by the rebels.
Rebel leaders have dismissed the plan and it remains to be seen to what extent they would comply.