UPDATE 4-Ethiopia PM gives Tigray forces 72-hour ultimatum to surrender regional capital

* PM Abiy's troops aim to encircle rebel-held Mekelle

* Tigrayan rebel forces say they are standing firm

* War kills hundreds, sends refugees fleeing to Sudan (Updates with PM's ultimatum)

ADDIS ABABA/NAIROBI, Nov 22 (Reuters) - Ethiopian Prime Minister Abiy Ahmed gave Tigrayan regional forces 72 hours to surrender before the military begins an offensive on the regional capital of Mekelle.

"We urge you to surrender peacefully within 72 hours, recognising that you are at the point of no return," Abiy said in a Twitter message on Sunday evening.

Tigrayan forces could not immediately be reached for comment.

A military spokesman said earlier that advancing Ethiopian troops plan to surround Mekelle with tanks and may shell the city to force surrender.

The Tigray People's Liberation Front (TPLF), which is refusing to surrender its rule of the northern region, said its forces were digging trenches and standing firm.

Reuters could not confirm the latest statements on the war. Claims by all sides are hard to verify because phone and internet communication has been down.

Abiy's federal troops have taken a string of towns during aerial bombardments and ground fighting, and are now aiming for Mekelle, a highland city of about 500,000 people where the rebels are based.

The war has killed hundreds, possibly thousands, sent more than 30,000 refugees into neighbouring Sudan, and seen rockets fired by rebels into neighbouring Amhara region and across the border into the nation of Eritrea.

Foreign nations have urged talks, but Abiy has pressed on with the offensive since Nov. 4.

(Writing by Katharine Houreld and Andrew Cawthorne Editing by Frances Kerry)