Azerbaijan accidentally shot down a Russian military helicopter in Armenia as fighting raged over Nagorno-Karabakh today, threatening to draw Moscow further into the conflict.

The defence ministry in Moscow said two crew members were killed when the Mi-24 helicopter was hit by a man-portable air defence system close to the border with Azerbaijan.

A third crew member was injured but managed to evacuate, it said.

Azerbaijan quickly admitted to having shot down the helicopter by accident and apologised.

"The Azerbaijani side offers an apology to the Russian side in connection with this tragic incident," the foreign ministry said in a statement, adding the move was "not aimed against" Moscow.

Azerbaijan said the decision was made to open fire on the helicopter due to the "tense situation in the region and increased combat readiness" after six weeks of fierce clashes with Armenia-backed separatists for control of Nagorno-Karabakh.

The helicopter was shot down near the Nakhchivan Autonomous Republic, a landlocked exclave of Azerbaijan between Armenia and Turkey, far from Nagorno-Karabakh.

Russia has a military pact with Armenia and a base in the country, but has so far insisted it would not get involved in the conflict with Azerbaijan unless Armenian territory itself came under threat.

Ferocious fighting continued over Nagorno-Karabakh today, with conflicting reports of whether Azerbaijani forces had managed to capture the disputed region's key town of Shusha, known as Shushi in Armenian.

Armenian officials insisted battles for the town were ongoing, with Prime Minister Nikol Pashinyan saying: "The fighting for Shushi continues."

The Armenian government said there were "persistent battles" in recent days and that separatist forces "confidently defended and are defending the fortress city of Shushi".

But Vahram Poghosyan, a spokesman for Karabakh's separatist leader, posted on Facebook that Armenian forces had lost control of Shusha, a strategically vital town that is the region's second-largest.

"We have to admit that a chain of failures still haunts us and the city of Shushi is completely out of our control," Mr Poghosyan said.

"The enemy is on the outskirts of Stepanakert," he said, referring to the region's main city, "and the existence of the capital is already in danger".

Karabakh declared independence nearly 30 years ago but the declaration has not been recognised internationally, even by Armenia, and it remains a part of Azerbaijan under international law.

The recent fighting has been the worst in decades, with more than 1,000 people reported killed including dozens of civilians and the real death toll is believed to be much higher.

The clashes have forced thousands to flee their homes leaving Stepanakert a ghost town devastated after weeks of shelling.

The longstanding ex-Soviet rivals have left three recent ceasefire agreements brokered by the United States, Russia and France in tatters.

The three countries co-chair the "Minsk Group" that helped broker a truce in 1994 but has failed to mediate a lasting resolution to the long-simmering territorial dispute.

Diplomatic efforts appeared to ramp up over the weekend as fighting intensified near Shusha, with Russian President Vladimir Putin speaking on Saturday to Turkish counterpart Recep Tayyip Erdogan and President Emmanuel Macron of France.

Turkey is a key ally of Azerbaijan and its involvement would be key to any agreement to halt the fighting.