Azerbaijani troops are on the edge of Nagorno-Karabakh's separatist stronghold of Stepanakert, prompting residents to hide in basements in fear, a rebel envoy told AFP on Friday.

"The situation in Stepanakert is horrible, Azerbaijani troops are all around the city, they are on the outskirts and people fear Azerbaijani soldiers could enter the city at any moment and start killings," separatist spokeswoman Armine Hayrapetyan said.

Hayrapetyan, who represents the separatist government's information centre in Yerevan, said Stepanakert and other parts of Nagorno-Karabakh have lost most basic services since Baku's lightning offensive to recapture the ethnically Armenian enclave.

"No electricity, no gas, no food, no fuel, no internet and telephone connection," Hayrapetyan said. "People are hiding in basements."

Armenian separatists agreed to lay down their arms in the face of clashes that they said killed 200 people.

They held an initial round of Russian-mediated integration talks with Azerbaijani representatives on Thursday.

"We have so many casualties, dead and wounded people," Hayrapetyan said, without providing details.