Armenia and Azerbaijan put themselves on a war footing after heavy fighting erupted Sunday between Azerbaijan and Armenian separatists claiming military and civilian casualties on both sides, including at least one child.

The worst clashes since 2016 have raised the spectre of a fresh large-scale war between arch enemies Azerbaijan and Armenia that have been locked for decades in a territorial dispute over Nagorny Karabakh.

In a televised address to the nation, Azerbaijan President Ilham Aliyev vowed victory over Armenian forces.

"Our cause is just and we will win," Aliyev said, repeating a famous quote from Soviet dictator Joseph Stalin's address at the outbreak of World War II in Russia.

"Azerbaijani army is fighting on its territory,"  he said.  

Both Armenia and the breakaway region of Nagorny Karabakh declared martial law and military mobilisation.

"Get ready to defend our sacred homeland," Armenian Prime Minister Nikol Pashinyan said on Facebook.

Karabakh's leader Araik Harutyunyan told an emergency parliament session in the enclave's main city of Stepanakert that he had "declared martial law" and a mobilisation of all those fit for military service.

Armenia said earlier Sunday that Azerbaijan attacked civilian settlements in Nagorny Karabakh including  Stepanakert, with the attacks killing of a woman and child.

Azerbaijan's defence ministry said it had 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.

"There are reports of dead and wounded among civilians and military servicemen," the spokesman for the Azerbaijani presidency, Hikmet Hajiyev, said.

Karabakh's ombudsman Artak Beglaryan said "there are civilian casualties" among the region's population.

- Russia urges ceasefire - 
Ethnic Armenian separatists seized the Nagorny Karabakh region from Baku in a 1990s war that claimed 30,000 lives.

Talks to resolve one of the worst conflicts to emerge from the 1991 collapse of the Soviet Union have been largely stalled since a 1994 ceasefire agreement.

France, Russia and the United States have mediated peace efforts as the "Minsk Group" but the last big push for a peace deal collapsed in 2010.

A major confrontation between the ex-Soviet Caucasus neighbours would draw in big regional players Russia and Turkey.

Russia called for an immediate ceasefire as did France.

"We are calling on the sides to immediately halt fire and begin talks to stabilise the situation," Moscow's foreign ministry said

Azerbaijan's ally Turkey blamed Yerevan for the flare-up and promised Baku its "full support".

"We strongly condemn the attack by Armenia against Azerbaijan," Turkish President Recep Tayyip Erdogan's spokesman Ibrahim Kalin said on Twitter.

"Armenia violated the ceasefire by attacking civilian locations," he said.

- 'Turkish mercenaries' - 
The Karabakh leader, Harutyunyan, accused Ankara of sending mercenaries to Azerbaijan. "We have information that mercenaries from Turkey and other countries were airlifted to Azerbaijan," he said. "The Turkish army is already in Azerbaijan, under the guise of military drills," he claimed.

On Sunday morning, Azerbaijan started "active bombing" along Karabakh's frontline including civilian targets and in the main city Stepanakert, Karabakh's presidency said.

The rebel defence ministry claimed its troops shot down two Azerbaijani helicopters and three drones.

The claims were denied by the defence ministry in Baku which said its forces were responding to an Armenian offensive.

Hajiyev said Armenian forces in Karabakh "blatantly violated the ceasefire regime and, using large-calibre weapons, mortar launchers and artillery have launched an intense attack on the positions of Azerbaijan's armed forces along the frontline."

Azerbaijan's transport ministry said it has "put restrictions on internet traffic" in order to prevent "Armenian provocations.

On Friday, Aliyev accused Armenia of undermining Karabakh peace talks.

In July, heavy clashes along the two countries' shared border -- hundreds of kilometres from Karabakh -- claimed the lives of at least 17 soldiers from both sides.

Raising the stakes, Azerbaijan at the time threatened to strike Armenia's atomic power station if Yerevan attacked strategic facilities.

During the worst recent clashes in April 2016, around 110 people were killed.