"Fighters attacked a convoy of refugees with mortar and rocket fire at 9.40 a.m., near the villages of Novoselovka and Khryashchevatoe," Xinhua quoted a military official as saying.
Following the attack, several cars from the column caught fire and "many people" in the vehicles were burned to death, the official said, adding that the exact casualties were being verified.
However, Andrei Purgin, deputy prime minister of the self-proclaimed Donetsk People's Republic, denied that insurgents were responsible for the deadly attack.
Ukrainian troops Sunday claimed to have entered the rebel-held city of Luhansk and taken control of several public buildings that had been seized by the insurgents.
According to the UN, the conflict in eastern Ukraine which began in April, has claimed the lives of over 1,500 people and injured 4,390.
Almost 850,000 people have been displaced and forced to flee their homes.