The six-member patrol consisting of two armoured vehicles from the Organisation for Security and Co-operation in Europe was travelling on Sunday in an area of the Luhansk region, which is not under control of Ukrainian authorities.
The nationalities of the victims were not immediately released.
The Ukrainian military said the incident took place at 10:17am local time (07:17 GMT) near the small village of Pryshyb, which is controlled by Russia-backed separatists.
Sebastian Kurz, the Austrian foreign minister, who also serves as the OSCE's chairman, wrote on Twitter: "Death of colleague is a shock to whole OSCE."
He also called for a "thorough investigation" into who was responsible for the blast.
Sigmar Gabrial, German foreign minister, expressed concern about the killing.
"Someone who just wanted to help create peace and put an end to the fighting has lost his life today," Gabrial said.
The de facto authorities in Luhansk told a local news agency, Luhanskinformcentre, the incident happened because the OSCE convoy made a diversion from its route, Russia's TASS news agency reported.
"It is known that the aforementioned crew deviated from the main route and was moving along secondary roads, which is prohibited by the mandate of the OSCE SMM. We repeatedly drew the attention of the OSCE SMM on the observance of the necessary security measures during monitoring travel routes," said the unidentified rebel representative.
OSCE deployed a special monitoring mission to Ukraine in 2014, after conflict erupted between the Ukrainian government and Russian-backed rebels.
The 57-member states of the organisation - which include Ukraine, Russia, and the United States - extended the monitoring mission in Ukraine by a year in March.
The OSCE has 600 employees in the country.
Three years after Moscow annexed the Crimean region, tensions between Ukraine and separatists in the Russian-held eastern part of the country remain high and a 2015 ceasefire agreement is violated regularly.
|The OSCE security monitor has 600 employees in the country [File: Valeri Kvit/EPA]The OSCE security monitor has 600 employees in the country [File: Valeri Kvit/EPA]|
U.S. 'Shocked' By OSCE Member Death In Ukraine, Urges Russia To Aid Probe
The U.S. State Department has said it was "shocked" over the death of a U.S. citizen serving as an international monitor in the conflict zone in Ukraine and called on Russia to use its influence to allow a full investigation.
The comments came on April 23 after the Organization for Security and Cooperation in Europe (OSCE) said a member of its monitoring staff was killed and two more were injured after their vehicle hit a mine in eastern Ukraine in an area controlled by Russia-backed separatists.
The OSCE said the two injured members were sent to the hospital for treatment.
A Ukrainian Foreign Ministry official confirmed the fatality to RFE/RL and said the person killed in the blast was an American paramedic.
In its statement released late on April 23, the State Department said it was "shocked and deeply saddened" by the death of the American citizen "when his vehicle struck an explosive in separatist-controlled territory."
"This death underscores the increasingly dangerous conditions under which these courageous monitors work, including access restrictions, threats, and harassment," the statement said. "The United States urges Russia to use its influence with the separatists to allow the OSCE to conduct a full, transparent, and timely investigation."
It did not identify the U.S. citizen.
It was the first reported death among OSCE staff members, who were first deployed to the region in 2014 to monitor the cease-fires between the Russia-backed separatists and Ukrainian government forces in a conflict that has killed at least 9,940 people.
EU foreign-affairs chief Federica Mogherini said the incident was a "reminder of the urgent need for progress on a peaceful resolution of the conflict."
A spokesman for Austria's Foreign Ministry said one of the injured was a German woman. The other injured person is a Czech citizen, the OSCE said in a press conference held hours after the incident.
An OSCE official told RFE/RL that the names of those involved would be released after their families had been notified.
The OSCE members were on patrol in the separatist-held village of Pryshyb in the Luhansk region when the vehicle is believed to have struck a mine and exploded, the official told RFE/RL.
The Ukrainian military said the incident took place at 10:17 a.m. local time (0717 UTC/GMT).
Austrian Foreign Minister Sebastian Kurz, who holds the rotating chairmanship of the OSCE, called for an investigation into the incident and, in a tweet, said he had spoken to the mission's ambassador, Ertugrul Apakan.
"Need thorough investigation; those responsible will be held accountable," he said on Twitter.
German Chancellor Angela Merkel made a similar call.
"The federal government expects that the parties to the conflict immediately do everything possible to ascertain how we reached this tragic point and who holds responsibility for it," she said.
She also noted it was time for all sides to start honoring a long-promised cease-fire, but noted that the Russia-backed rebels bore the greater responsibility to make sure that happened.
German Foreign Minister Sigmar Gabriel expressed concern about the killing. "Someone who just wanted to help create peace and put an end to the fighting has lost his life today," he said.
Ukrainian President Petro Poroshenko instructed Foreign Minister Pavlo Klimkin to keep the OSCE informed of Kyiv's investigation into the blast.
"This crime must be investigated and those responsible must be punished," Poroshenko wrote on Facebook.
"Ukraine condemns all forms of constant resistance by the rebels to the OSCE SMM's work," he added.
A statement issued by the Russia-backed separatists in Luhansk on their website claimed that the OSCE team had veered off the main road and was traveling along an unsafe route.
"We know that this patrol team deviated from the main route and was moving along secondary roads, which is prohibited by the OSCE Special Monitoring Mission mandate," the separatist statement said.
Eduard Basurin, a senior separatist figure, said the OSCE vehicle "deviated from its main route and moved onto back roads" when it struck what he said was an antitank mine.
The separatists' claim could not be confirmed.
The unarmed, civilian OSCE mission, with more than 700 international observers, seeks to reduce tensions and report on the situation on the ground in Ukraine.
In March, the 57 member states of the OSCE, which include Ukraine, Russia, and the United States, decided by consensus to extend the mandate of the mission for another year, its third extension since it was first deployed in Ukraine in 2014.
Western countries have imposed sanctions on Moscow for its illegal annexation of Ukraine's Crimea Peninsula and its support for the separatists in eastern Ukraine.