Without even firing a shot, masked rebel gunmen overran a Ukrainian military headquarters in the main eastern city of Donetsk on Friday and swiftly declared they were in control.

After a couple of hours of what one local described as "negotiations", uniformed members of a National Guard special forces unit simply took off in a few trucks, leaving the building to the rebels.

Ukraine's military offensive against pro-Russian insurgents in the east, already a month old, has so far been a humiliating failure, with separatists now firmly in control of large swathes of the country's industrial heartland.

Despite its superior military firepower, the Ukrainian army is running into almost nightly confrontations with well-armed insurgents barricaded in a dozen towns and cities.

It has lost at least a dozen men, seven of them this week in a single bloody ambush near the epicentre of the uprising in Slavyansk.

"The operation has proved to be ineffective because Ukrainian forces were not prepared," said military expert Mykola Sungurovsky.

Yaroslav Gonchar, deputy battalion commander of the Azov volunteer unit in the Ukrainian National Guard, pulled no punches in apportioning blame.

"At the local level, we faced betrayal by the police and the opposition of the local people, as well as the incompetence of those planning the operation," he said.

- 'No repeat of Crimea' -

Ukraine's new leaders launched the "anti-terrorist" operation on April 13 after gunmen sought to capitalise on Moscow's annexation of Crimea in March and began overrunning city halls, police stations and military barracks across the far east.

The army moved in with clear objectives -- to disarm the rebels, clear them from scores of occupied buildings and reestablish Kiev's authority over the region.

"We will not allow Russia to repeat the Crimea scenario in the east of Ukraine," interim President Oleksandr Turchinov has vowed.

But the human cost has been high, with the UN on Friday putting the number of dead in the southeast at 127 -- exceeding the toll from the bloodletting in Kiev earlier this year during pro-EU protests that saw the ouster of the corruption-stained Kremlin-backed president.

And since the Russian takeover of Crimea, rebels are now claiming control of the main industrial regions of Donetsk and Lugansk, although residents say it is not really clear who is actually running things on the ground.

The two regions -- home to seven million of Ukraine's 46 million population -- declared themselves independent "republics" after claiming victory in weekend referendums denounced as illegitimate farces by Kiev and the West.

Donetsk, the larger of the two and the hub of Ukraine's sprawling coal and steel industry, has already asked Moscow if it can join the Russian Federation.

From the first days of the offensive, the Ukrainians had to deal with a number of embarrassing blows. Several military helicopters were shot down and tanks and armoured vehicles were seized by the rebels.

- 'Dialogue not force' -

There are almost daily reports of roaming gunmen storming government buildings, police stations and abducting local political and military officials, but not all the claims can be verified.

Ukraine, the International Crisis Group warned in a grim report this week, is "running out of time".

"Shaken by the separatist agitation and distracted by Russian troops on its border, (the interim government) has not asserted itself coherently," the think-tank said.

"Military efforts to restore order in the southeast have underlined both the government's weakness and the pressing need for a solution through political dialogue not force."

The ICG's views were echoed by Volodymyr Fesenko at the Penta centre for political studies in Kiev.

"There has been no real achievement. Ukrainian forces have absolutely no way of restoring order in the region," he said.

"It's not possible to keep the Donbass (the term for the Donetsk/Lugansk region) by force. It can only be achieved through negotiations."

Fesenko said it was vital for the Kiev authorities to bring on board local political and business heavyweights such as Ukraine's richest man, billionaire powerbroker Rinat Akhmetov.

Akhmetov, an influential force in the east with his vast industrial empire, has kept to the middle ground in the confrontation, walking a fine line between Kiev's pro-West authorities and the rebels.

If the military offensive is not rapidly accompanied by political dialogue, Fesenko warned, the east will become a new Transdniestr -- the pro-Russian separatist region of Moldova.

"And there could be even worse outcomes: a long drawn-out war and an escalation of the violence, in other words the Yugoslav scenario," he warned.