NATO chief Jens Stoltenberg Friday downplayed Kremlin threats of escalation after President Joe Biden secretly lifted restrictions on Ukraine using US-supplied weapons against targets inside Russian territory, as five people were killed in an overnight strike on Kharkiv.

The daily pounding of Ukraine's second-biggest city has caused a shift in Washington's thinking, which has heretofore resisted allowing Ukraine to use longer-range US weapons to attack Russian territory, fearing it could drag NATO into the direct conflict with Russia.

The Kremlin accused the West on Thursday of "entering a new round of escalations in tensions".

Stoltenberg, speaking to reporters at a meeting of NATO foreign ministers in Prague, responded that "this is part of efforts by President (Vladimir) Putin and Moscow to prevent NATO allies from supporting Ukraine to defend themselves, and, again, Ukraine has the right for self defence and we have the right to help Ukraine."

US officials said Thursday that Biden had lifted restrictions on Ukraine using weapons supplied by the United States against targets on Russian territory, but only to defend Kharkiv.

Overnight, Russian strikes on a residential area in Kharkiv city killed five people and wounded at least 23 others, including two children, regional police said early Friday, warning residents could still be trapped under the rubble.

"The rescue and search operation continues. All services are working at the scene," said Oleg Synyegubov, Head of Kharkiv Region Military Administration.

Kharkiv Mayor Igor Terekhov said there had not been "a single military person, not a single military object" present.

The city is located just across the border from Russia's Belgorod and regularly comes under attack from Russian missiles.

Russian strikes that hit a hardware superstore in Kharkiv last weekend killed 16 people.

On the other side of the border, in Russia's southern Krasnodar region, Russia's military said on Friday that it had shot down 29 Ukrainian drones overnight that were targeting the port city of Novorossiisk and an oil depot in Temryuk.

The Temryuk strike sparked a fire, which raged for several hours before being extinguished, and wounded several oil depot workers, Krasnodar Region Governor Venyamin Kondratyev wrote on the Telegram social media channel.

No injuries were reported in the Novorossiisk strike, local authorities said.

Restrictions lifted 

A US official said Biden "had recently directed his team to ensure that Ukraine is able to use US-supplied weapons or counter-fire purposes in the Kharkiv region so Ukraine can hit back against Russian forces that are attacking them or preparing to attack them."

The official said that ATACMS missiles, which could hit deeper inside Russia, were still prohibited.

A second US official confirmed the change of policy, which followed weeks of behind-the-scenes discussions between the White House and top US military and State Department officials.

Biden gave the final sign-off in recent days, but the decision was kept secret for operational reasons and only became effective on Thursday.

French President Emmanuel Macron had insisted this week that Ukraine be allowed to "neutralise" bases in Russia used to launch strikes.

German Chancellor Olaf Scholz has remained cool to the idea, though his country did promise Ukraine a new package of military aid worth 500 million euros ($540 million) on Thursday.