Andrea Rocchelli, 30, and his Russian assistant Andrei Mironov, a former Soviet-era dissident, were killed when they were caught up in a fierce firefight in the rebel-held flashpoint of Slavyansk on Saturday.
Rocchelli was the founder of the Cesura photo agency and a contributor to leading media organizations such as US magazine Newsweek and the French daily Le Monde.
"These deaths are horrid reminders that not enough is being done to protect journalists who risk their lives reporting from conflict zones in Ukraine," said the OSCE's representative for media freedom Dunja Mijatovic.
The Italian foreign ministry said the exact circumstances of Rocchelli's death remained unclear because the situation on the ground was "difficult to verify" even for the Ukrainian authorities.
A ministry spokeswoman said his body had been taken to a hospital close to Slavyansk for positive identification before being flown to the Ukrainian capital.
French photographer William Roguelon of the Wostok Press agency told AFP from the Slavyansk hospital on Saturday that he and the Italian were caught in crossfire after approaching the city in a car together with their Russian translator.
Roguelon said all three men were hit by shrapnel from mortar shells during a sudden flareup in fighting between government troops and separatists just south of the city.
He said the other photographer and the translator had tried to seek shelter in a ditch as up to 60 shells fell.
"They adjust their aim and one of the shells fell in the middle of the ditch," the French photographer said.
Roguelon said he received shrapnel wounds to both legs but could not identify who was attacking the journalists' position.
But he noted that it was the rebels who allowed him to leave the area.
'Appalling situation for journalists'
Slavyansk was one of the first cities seized by armed separatists at the start of their insurgency in early April and is now the scene of intense almost daily fighting between the rebels and pro-Kiev forces.
"I have raised my concern about the appalling situation regarding journalists' safety in the country on numerous occasions, but it has continued to deteriorate," the OSCE's Mijatovic said.
The head of Russia's human rights group Memorial, Alexander Cherkasov, identified the slain Russian as Andrei Mironov.
Cherkasov said Mironov was a Soviet-era dissident who learnt Italian while spending time in a labour camp he was sent to for his political views.
"He worked constantly with the Italian press," said Cherkasov, adding that he worked from 1994-96 in Chechnya, where Islamic militants waged a separatist campaign against Russian troops.
"It was his mission - to be in places like that to provide people with truthful information," Cherkasov said.
Both the Ukrainian foreign and interior ministries said they had no immediate information about the incident.
But the city's self-proclaimed "people's mayor" Vyacheslav Ponomaryov told Russian media that the three men "came under fire from the Ukrainian side".
Rocchelli was a graduate of the Polytechnic University of Milan and had previously covered the Arab Spring uprisings in Tunisia and Libya.
His photographs featured in an article entitled "We Are Not Animals" about family life under wartime conditions in Slavyansk published on the website of Russia's opposition Novaya Gazeta paper on May 19th. The article was written by Mironov.