Pro-Russian rebels are holding an independence vote in eastern Ukraine, a move dismissed as “bogus” by the West but which could pull the ex-Soviet republic apart and bring damaging US sanctions down on Russia.

The poll, carried out on Sunday as two “referendums” in provinces where the insurgents hold over a dozen towns, marks a serious deepening of the political crisis in Ukraine.

Although a ‘yes’ vote would likely only be recognised by Russia, it would greatly undermine a presidential election Ukraine is to hold in two weeks, which the United States and the European Union see as crucial to restoring stability.

On Saturday, France and Germany jointly threatened “consequences” on Russia if the election is scuppered – echoing US President Barack Obama’s warning of automatic sanctions that would slice into whole sectors of Russia’s weakening economy.

Sunday’s vote comes amid intensifying violence on the ground in east Ukraine.

Troops have been battling the well-armed rebels, who have barricaded themselves in towns and cities in the two provinces where the “referendums” are taking place: Donetsk and Lugansk.

Despite rebel claims that the polling will reach 90 per cent of the seven million people living in these two provinces, the areas they hold account for less than half that population.

They decided to go ahead with the vote despite a public request made Wednesday by Russian President Vladimir Putin that they postpone it.

Polling stations will open in schools in rebel-held territory at 8am (1500 AEST) and close 12 hours later, according to insurgent chiefs in the city of Donetsk.

Kiev has already dismissed the vote as “illegitimate” and against the Ukrainian constitution.

However, like in Crimea – which Russia annexed in March after a similar referendum – it has been powerless to stop preparations.

The Ukrainian government and its Western backers accuse Putin of deploying Russian special forces in east Ukraine, as in Crimea, to see the vote through and to sabotage the May 25 presidential election.

Putin belatedly admitted sending military forces to Crimea but continues to deny militarily meddling in east Ukraine.

In their joint statement on Saturday, French President Francois Hollande and German Chancellor Angela Merkel urged Ukraine’s security forces to stop their offensive on rebel-held positions in order to give dialogue a chance.

That echoed a call by Putin, who set that as his condition for backing the presidential election.

But, the leaders of France and Germany warned, if the subsequent presidential election was stymied, “appropriate consequences should be drawn”, indicating tougher sanctions in line with those brandished by the United States.

The two also called for a “visible” withdrawal of Russian troops from the Ukrainian border after NATO disputed Putin’s claims he had pulled back his estimated 40,000 servicemen.

The rebel chief in the flashpoint town of Slavyansk, Vyacheslav Ponomaryov, said he expected 100 per cent turnout for Sunday’s vote.

After the results come in, “the Republic of Donetsk will begin to function” and cultivate “friendly relations” with Russia, he added.