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Ukraine and Russia have made significant progress on a tentative 15-point peace plan including a ceasefire and Russian withdrawal if Kyiv declares neutrality and accepts limits on its armed forces, according to three people involved in the talks.

The proposed deal, which Ukrainian and Russian negotiators discussed in full for the first time on Monday, would involve Kyiv renouncing its ambitions to join Nato and promising not to host foreign military bases or weaponry in exchange for protection from allies such as the US, UK and Turkey, the people said.

The nature of western guarantees for Ukrainian security — and their acceptability to Moscow — could yet prove to be a big obstacle to any deal, as could the status of Ukrainian territories seized by Russia and its proxies in 2014. A 1994 agreement underpinning Ukrainian security failed to prevent Russian aggression against its neighbour.

Although Moscow and Kyiv both said on Wednesday that they had made progress on the terms of a deal, Ukrainian officials remain sceptical Russian President Vladimir Putin is fully committed to peace and worry that Moscow could be buying time to regroup its forces and resume its offensive.

Mykhailo Podolyak, a senior adviser to Ukrainian President Volodymyr Zelensky, told the Financial Times that any deal would involve “the troops of the Russian Federation in any case leaving the territory of Ukraine” captured since the invasion began on February 24 — namely southern regions along the Azov and Black Seas, as well as territory to the east and north of Kyiv.

Ukraine would maintain its armed forces but would be obliged to stay outside military alliances such as Nato and refrain from hosting foreign military bases on its territory.

Putin’s press secretary Dmitry Peskov told reporters on Wednesday that neutrality for Ukraine based on the status of Austria or Sweden was a possibility.

“This option is really being discussed now, and is one that can be considered neutral,” said Peskov.

Sergei Lavrov, Russia’s foreign minister, said that “absolutely specific wordings” were “close to being agreed” in the negotiations.