Armenia has declared martial law and ordered its military to mobilise after a major flare-up in violence with Azerbaijan over the disputed Nagorno-Karabakh region.

Heavy fighting between the two arch-foes broke out on Sunday, with both sides blaming each other for the escalation that led to reports of casualties.

Armenia accused neighbouring Azerbaijan of attacking civilian settlements in Nagorno-Karabakh – which is internationally recognised as part of Azerbaijan but is controlled by Armenian forces – including the main city of Stepanakert.

Armenia’s defence ministry said its forces downed two Azerbaijani helicopters and three drones in response to an attack it said began at 04:10 GMT.

But Azerbaijan’s defence ministry said it launched a “counter offensive to suppress Armenia’s combat activity and ensure the safety of the population”, using tanks, artillery missiles, combat aviation and drones.

The ministry said an Azerbaijani helicopter had been downed but its crew had survived.

“There are reports of dead and wounded among civilians and military servicemen,” the spokesman for the Azerbaijani presidency, Hikmet Hajiyev, said in a statement.

In a statement on Facebook, Armenian Prime Minister Nikol Pashinyan said “the government has decided to declare martial law and a total mobilisation”, telling citizens to “get ready to defend our sacred homeland”.

Azerbaijani President Ilham Aliyev, meanwhile, said in a televised address to the nation that “there are losses among the Azerbaijani forces and the civilian population as a result of the Armenian bombardment”.

He warned that those using intimidation tactics against his country would regret it, adding that Azerbaijan defends its lands and Nagorno-Karabakh belongs to it.

In Nagorno-Karabakh, where officials also declared martial law and ordered citizens to mobilise, ombudsman Artak Beglaryan said “there are civilian casualties” among the population in the region.

Separately, a spokesman for the Armenian defence ministry said an Armenian woman and child were killed in Nagorno-Karabakh.

Al Jazeera’s Robin Forestier-Walker, who has covered the long-running conflict extensively, described Sunday’s flare-up as “a very serious escalation”.

The worst fighting in years has raised the spectre of a new large-scale war between Azerbaijan and Armenia that have been locked for decades in a territorial dispute over Nagorno-Karabakh.

Ethnic Armenians in the region declared independence during a conflict that broke out as the Soviet Union collapsed in 1991. They seized Karabakh from Baku in the war, which killed 30,000 people.

Though a ceasefire was agreed in 1994, Azerbaijan and Armenia frequently accuse each other of attacks around Nagorno-Karabakh and along the separate Azerbaijan-Armenia frontier.

Talks to resolve the Nagorno-Karabakh dispute have been largely stalled since the ceasefire agreement.

The Minsk Group, which includes France, Russia and the United States, has worked to mediate the dispute, but the last big push for a peace deal collapsed in 2010.

Russia on Sunday called for an immediate ceasefire and the start of talks. “We are calling on the sides to immediately halt fire and begin talks to stabilise the situation,” its foreign ministry said.

Turkish presidential spokesman Ibrahim Kalin tweeted: “Armenia has violated the ceasefire by attacking civilian settlements … The international community must immediately say stop to this dangerous provocation.”

In July, heavy clashes along the two countries shared border – hundreds of kilometres from Nagorno-Karabakh – killed at least 17 troops from both sides.