The rival Caucasus nations have been locked in some of the fiercest clashes over Karabakh after it was occupied by Armenians in the 1990s after the collapse of the Soviet Union.
Armenian and Azerbaijani forces have intensified their shelling after five days of fighting over the occupied Karabakh region leaves nearly 130 people dead.
Khankendi, also known as Stepanakert, in occupied-Karabakh saw two explosions and sirens sounding during clashes early on Thursday.
The rival Caucasus nations have been locked in a bitter stalemate over Karabakh after it was occupied by Armenians in the 1990s after the collapse of the Soviet Union.
Border clashes that broke out in occupied-Karabakh on Sunday have resulted in the heaviest fighting between Armenia and Azerbaijan in years.
Azerbaijan's defence ministry said its forces had carried out "crushing artillery strikes against Armenian forces' positions in the occupied territories" during the night.
It denied claims by Yerevan that one of its helicopters had been downed, crashing in Iran and said that fighters on the Armenian side had been "forced to retreat from previously held positions along the entire stretch of the frontline."
Armenian defence ministry in turn said fighting had "intensified" in the morning after exchanges at night and that its troops had repelled Azerbaijani attacks.
Rising death toll
The five-day death toll in Azerbaijan has risen to 16 amid continued Armenian attacks on civilian settlements.
Azerbaijani prosecutors said Armenian shelling killed a civilian in the town of Tartar on Thursday morning and badly damaged the train station there. They said the number of those injured by Armenian forces in Tartar has risen to 55.
Both sides say they have inflicted heavy military losses on each other, claiming several hundred troops had been killed.
Azerbaijan's parliament declared a state of war in some of its cities and regions following Armenia's border violations and attacks in the occupied Upper Karabakh, also known as Nagorno-Karabakh, region.
On Monday, Azerbaijan declared partial military mobilisation amid the clashes.
No closer to ending
Statements from both sides indicate that the flare-up of a decades-old conflict that has killed dozens of people since Sunday was no closer to an end.
The president of Azerbaijan said Armenia's withdrawal from Nagorno-Karabakh was the sole condition to end fighting over the separatist territory. Armenian officials alleged Turkey's involvement in the renewed conflict and said its neighbour's actions “hinder the efforts of the international community to cease the hostilities.”
Meeting with wounded servicemen, Azerbaijani President Ilham Aliyev said Armenia must “unconditionally, completely and immediately leave” occupied-Karabakh, which lies within Azerbaijan and has been under the control of ethnic Armenian forces backed by the Armenian government since 1994.
“If Armenia’s government fulfils it, the fighting will stop, blood will not be shed, there will be peace,” Aliyev was quoted by the Russian state Tass news agency as saying. “Azerbaijan is restoring its territorial integrity, and we have every right to do so.”
The scenario laid out by the Azerbaijani leader is at odds with Armenia’s views on ending the crisis.
Aliyev's statement came a day after Armenian Prime Minister Nikol Pashinyan said that Azerbaijan's “aggression towards Nagorno-Karabakh and Armenia” needed to end before any compromise could be reached.
On Wednesday, Pashinyan also said that Armenia may recognise Nagorno-Karabakh as independent, a move that could further interfere with a potential settlement of the dispute.
Conflicting international approaches
Even as international pressure mounts for an end to the fighting, there are clear differences in how different countries are approaching the conflict.
Turkey wants Armenia to withdraw from Karabakh completely and the international community to make a clear distinction between the fighting countries based on the occupier and occupied.
France, Russia and the United States are demanding an immediate ceasefire between Azerbaijan and Armenian forces but offer a solution based on a return to negotiations without delay.
"We call for an immediate cessation of hostilities between the relevant military forces," the French, Russia and US presidents said in a joint statement in their capacity as co-chairs of the OSCE Minsk Group.
"We also call on the leaders of Armenia and Azerbaijan to commit without delay to resuming substantive negotiations, in good faith and without preconditions, under the auspices of the OSCE Minsk Group Co-Chairs."
Relations between the two former Soviet republics have been tense since 1991, when the Armenian military occupied Karabakh, an internationally recognised territory of Azerbaijan.
Four UN Security Council and two UN General Assembly resolutions, as well as many international organisations, demand the withdrawal of the occupying forces.
The OSCE Minsk Group was formed in 1992 to find a peaceful solution to the conflict, but to no avail. A ceasefire, however, was agreed on in 1994.
READ MORE: Nagorno-Karabakh: A frozen conflict erupts