Georgia has ordered its forces to cease fire and offered to immediately begin talks with Russia to end hostilities.
‘Georgian armed forces ceased fire in the Tskhinvali region,’ a Georgian foreign ministry statement said.
It added that President Mikheil Saakashvili had ordered the ceasefire and that his message had been sent to the Russian side.
‘Georgia expresses its readiness to immediately start negotiations with the Russian Federation on a ceasefire and termination of hostilities,’ the statement said.
Russian President Dmitry Medvedev said Georgia should unconditionally withdraw its forces from the conflict zone in its breakaway region of South Ossetia.
Mr Medvedev spoke to French President Nicolas Sarkozy in a telephone conversation and told him that Tbilisi should also immediately sign a formal pledge not to attack South Ossetia.
The White House responded using strong diplomatic language, warning Russia that its 'disproportionate and dangerous escalation' of the conflict could significantly harm relations between Washington and Moscow.
The US said that Russia's reaction to any Georgian withdrawal from South Ossetia would be a key test of the country's true intentions in the region.
Russian Foreign Minister Sergei Lavrov said that while Russia no longer sees Georgian President Mikheil Saakashvili as a partner, his departure is not a must to solve the crisis.
Earlier, Tbilisi international airport was hit in a Russian air strike, hours before the scheduled arrival of French Foreign Minister Bernard Kouchner
Russian forces have since taken control of the main city in South Ossetia, Tskhinvali.
There are also conflicting reports that Russian ships have set up a sea blockade to prevent arms and other military supplies from reaching Georgia..
Abkhazia unrest
There were signs of a second front opening in the conflict, with Georgia accusing Russia of sending troops by sea to the larger rebel region of Abkhazia on the Black Sea.
Sergei Bagapsh, head of Georgia's separatist region of Abkhazia, has said he has sent 1,000 troops to the disputed Kodori gorge and announced the mobilisation of reservists to reinforce its positions.
He said that the region is ready to act independently.
‘We are ready to enforce order and go further if there is resistance from the Georgian side,’ he said.
The leader of the breakaway Georgian region has decreed a 10-day state of war in areas close to Georgian-controlled territory.
A UN peacekeeping official also warned of an imminent military offensive by the Abkhaz who, like the South Ossetians, broke with Tbilisi in the early 1990s after a war.
A Georgian ceasefire offer went unheeded by Moscow and separatists in the South Ossetian capital of Tskhinvali reported that Georgian forces, dug in on high ground outside the town, were continuing to fire on the town.
Georgia has asked the US to act as a mediator with Russia in the crisis.
Georgian National Security Council Secretary Alexander Lomaia said they have asked US Secretary of State Condoleezza Rice to mediate with the Russians, to 'transmit them our message'
