In the past three weeks alone, the number of people displaced inside Ukraine itself has doubled to at least 260,000, according to the UN’s Vincent Cochetel in Geneva.
Another 814,000 people have crossed the border into Russia this year, he says.
Pro-Russian rebels have been fighting Ukrainian forces since April.
Separatists in the eastern regions of Donetsk and Luhansk declared independence after Russia annexed Crimea from Ukraine.
Since the violence erupted, some 2,600 people have been killed and thousands more wounded.
The city of Luhansk has been under siege by government forces for the past month and is without proper supplies of food and water.
But the Ukrainian army has been forced to retreat as pro-Russian rebels gain ground, and said they had withdrawn from the city’s airport after coming under attack from “Russian tanks”.
Military spokesman Andriy Lysenko said sappers had blown up the airport’s runway so that it could not be used by rebel forces.
Rebels have also advanced in Donetsk region, around the city of Donetsk and further south near the port of Mariupol.
Ukraine’s million displaced – by Imogen Foulkes, Geneva
Many of those who have fled the violence have not registered with the Ukrainian authorities: doing so does not guarantee they will receive any aid, and some young men apparently fear they will be recruited into the Ukrainian army if they declare themselves.
At the same time more than 800,000 Ukrainians, mainly ethnic Russians, have crossed the border into Russia. Others are fleeing to Poland, Belarus, or the Baltic states.
The UN has figures from one Baltic country, though it will not say which one, indicating that at least 20,000 Ukrainians have recently arrived.
Crisis talks between Ukraine officials, rebels and Russian envoys ended without agreement on Monday but will resume on Friday.
In other developments:
- Russia’s EU Ambassador Vladimir Chizhov told Russian media the Kremlin would release recordings of a controversial conversation between President Vladimir Putin and European Commission head Jose Manuel Barroso in which Mr Putin said he could capture Kiev within two weeks, if Mr Barroso did not object. Russian officials say the remarks have been taken out of context
- Russia is to alter its military structure as a result of the Ukrainian crisis and Nato’s presence in Eastern Europe, Kremlin adviser Mikhail Popov has said
- Estonian Prime Minister Taavi Roivas called for Nato to bolster its military resources to make it unthinkable for Russia to act beyond its current involvement in Ukraine, in a interview with Reuters news agency
- In its first detailed assessment since granting Ukraine a $17bn bailout in March, the International Monetary Fund said Ukraine would need billions of dollars of additional support if the fighting in the east continued through next year
- Corridor problemsIn early August, the UN refugee agency said 117,000 people were displaced in Ukraine but it now says that number has climbed dramatically, and could be even higher as many of those affected are unregistered and staying with family and friends.
The UN also says that there has been a decline in the use of humanitarian corridors set up by the Ukrainian authorities because of a series of fatal attacks on civilians.
In the past few days, an estimated 10,000 people have fled the southern port city of Mariupol since pro-Russian rebels captured areas close to the Russian border.
Russia denies Ukrainian and Western accusations that it is providing troops and equipment to the rebels.
It says 814,000 people have arrived from Ukraine this year under a visa-free regime.
Of these, 121,000 have applied for temporary asylum or refugee status. The UN says most Ukrainians in Russia are staying with relatives and friends or finding private accommodation.
UN High Commissioner for Refugees Antonio Guterres has warned that if the crisis is not stopped quickly “it will have not only devastating humanitarian consequences but it also has the potential to destabilise the whole region”.