BAKU - Azerbaijan on Sunday announced a unilateral ceasefire following fierce clashes with Armenian forces in the disputed region of Nagorny Karabakh, but threatened to strike back if its forces came under attack.

‘Azerbaijan, showing good will, has decided to unilaterally cease hostilities’, Azerbaijan's defense ministry said in a statement, warning that it would ‘liberate all (Armenian-) occupied territories’ if Armenian forces ‘do not stop provocations.’

But the spokesman of the Armenia-backed separatist presidency in Karabakh, David Babayan, told AFP that fighting has never been halted along the frontline. ‘Fiece fighting is under way on southestern and northeastern sectors of the Karabakh frontline,’ he said.

Earlier on Sunday, Karabakh forces claimed they took back strategic Lala-Tepe height in Karabakh which was captued by Azeri troops on Saturday. Baku denied the report, saying that the height remained under its control and that rebel troops sustained ‘serios manpowewr losses.’

On Satrurday, fierce clashes left at least 18 Armenian and 12 Azerbaijani soldiers dead and reportedly claimed the lives of two civilians after both sides accused each other of attacking with heavy weaponry across the volatile frontline. Both Russia and the West appealed to all sides to show restraint.

Ethnic Armenian separatists backed by Yerevan seized control of the mountainous Nagorny Karabakh region in an early 1990s war that claimed some 30,000 lives and the foes have never signed a peace deal despite the 1994 ceasefire.

The region is still internationally recognised as part of Azerbaijan and the two sides frequently exchange fire, but the latest episode marked a surge in violence and sparked frantic appeals for peace from international powers.

Energy-rich Azerbaijan, whose military spending has in the past exceeded Armenia's entire state budget, has repeatedly threatened to take back the breakaway region by force if negotiations fail to yield results. Moscow-backed Armenia says it could crush any offensive. But clashes between Azerbaijani and Armenian forces rumbled on Sunday, despite Baku announcing a ceasefire after the worst outbreak of violence in decades over the disputed Nagorny Karabakh region sparked international pressure to stop fighting.

Azerbaijan said it had decided to ‘unilaterally cease hostilities’ and pledged to ‘reinforce’ several strategic positions it claimed to have captured inside the Armenian-controlled territory. The Armenia-backed authorities in Karabakh - which claims independence but is heavily backed by Yerevan - said they were willing to discuss a ceasefire but only if it saw them regain their territory. Both sides accused each other of continuing to fire across the volatile frontline that has divided them since a war that saw Armenian separatists seize the region from Azerbaijan ended with an inconclusive truce in 1994.