More than 10,000 people have died in fighting after Russia-backed rebels took control of parts of Ukraine's industrial heartland in April 2014.
Ukraine signed a cease-fire deal with the separatists in 2015 which also provided for a gradual return of the areas into Kiev's fold while giving some autonomy to the areas. The agreement was never fully implemented.
The separatist Donetsk News Agency today quoted separatist leader Alexander Zakharchenko as saying that the rebels in Donetsk and Luhansk would form a state called Malorossiya.
Zakharchenko said they are drawing up a constitution that would be put up to a popular vote later. There was no immediate comment from Russia, which has been supporting the rebels.