Georgia says its forces have withdrawn from the separatist enclave of South Ossetia, and that Russian troops are now in control of the regional capital.
An interior ministry spokesman told the BBC it was not a military defeat but a necessary step to protect civilians from a "humanitarian catastrophe".
Georgia says Russia has brought an additional 10,000 soldiers across its frontiers, readying for a raid.
Earlier, Russian jets bombed a military airfield close to the Georgian capital.
There was no independent confirmation of the attack, although the BBC's Gabriel Gatehouse, who was in Tbilisi, said he had heard a loud explosion about the same time.
Georgian troops have pulled back to positions at or south of those held on 6 August, when the current hostilities began, said Georgian Interior Ministry spokesman Shota Utiashvili.
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ARMED FORCES COMPAREDGEORGIA
Total personnel: 26,900
Main battle tanks (T-72): 82
Armoured personnel carriers: 139
Combat aircraft (Su-25): Seven
Heavy artillery pieces (including Grad rocket launchers): 95RUSSIA
Total personnel: 641,000
Main battle tanks (various): 6,717
Armoured personnel carriers: 6,388
Combat aircraft (various): 1,206
Heavy artillery pieces (various): 7,550
Source: Jane's Sentinel Country Risk Assessments
He told the BBC that the withdrawal was necessary because of the mass casualties both within Georgia and South Ossetia, at the hands of the Russians.
Mr Utiashvili said 100 Georgian soldiers had been killed and many more injured.
Earlier, Georgia's President Mikhail Saakashvili called for an immediate ceasefire to stop what he described as an "annihilation" of his country's democracy.
In the absence of independent verification, there are conflicting figures about the casualties suffered on both sides but the numbers appeared to rise sharply on Saturday.
Based on Russian and South Ossetian estimates, the death toll on the South Ossetian side was at least 1,500. According to Moscow, all but a few of the dead were civilians.
Russian Prime Minister Vladimir Putin has accused Georgia of genocide against the South Ossetian people and defended Moscow's military action to intervene directly.
He said the territorial integrity of Georgia had "suffered a fatal blow", suggesting that it was unlikely that South Ossetia would re-integrate with the rest of Georgia after the conflict.
He said the conflict had created at least 34,000 refugees.
This figure wildly conflicts with that cited by the UN refugee agency, which it says is based on information supplied by both sides.
The UN estimates that about 2,400 people have fled South Ossetia to other parts of Georgia while between 4,000 and 5,000 have crossed the border into Russia.
Redrawing the map
Meanwhile, a joint delegation of the US, EU and the Organisation of Security and Co-operation in Europe is heading to Georgia in the hope of brokering a truce.
It comes as a third emergency session of the UN Security Council ended without an agreement on the wording of a statement calling for a ceasefire.
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But emissaries from the US and Europe who are Nato members may not be seen as honest brokers by the Kremlin when it comes to Georgia, BBC's diplomatic correspondent Bridget Kendall says.
The danger now is that Russia will not only use this crisis to demonstrate its military power in the region, but argue it is time to redraw the map, she adds.
Moscow has said there can be no "consultations" with Georgia unless Georgian forces withdraw to the positions they held outside South Ossetia before Thursday.
Meanwhile Russian jets have bombed several towns, including the central Georgian city of Gori, where Georgian troops had been massing to support forces engaged in South Ossetia.
Georgian TV has also shown pictures of damage to the Black Sea port of Poti, the site of a major oil shipment facility, after a reported Russian air strike.
President Saakashvili told the BBC on Saturday that Moscow wanted to take control of energy routes to Europe and accused it of "war crimes" against civilians.
His parliament has approved a presidential decree declaring that the country is in a state of war for 15 days.
Story from BBC NEWS:
Published: 2008/08/10 05:17:04 GMT
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