Russian and Georgian troops in fierce battle

Moscow vowed retaliation to defend Russians in the South Ossetian capital Tskhinvali hit by the Georgian artillery and air assault - the worst fighting since the 1992-94 separatist war in the region.

Amid spiralling tensions that the main European security watchdog warned were heading for "all out war", the Georgian government acknowledged it was already losing newly won areas of Tskhinvali that were bombarded by Russian forces.

South Ossetian separatist leader Eduard Kokoity said hundreds of civilians had been killed in the fighting and the international Red Cross said Tskhinvali hospitals were overflowing with casualties. "If this is not war, then I wonder what is," Georgia's ambassador to the Organisation for Security and Co-operation in Europe (OSCE) was quoted as telling a special meeting of the organisation's permanent council in Vienna.

The European Union, Nato and the United States all called for a halt to hostilities.

South Ossetia broke from Georgia in the early 1990s and has since been a constant source of friction between Georgia and Russia. The Tbilisi government accuses Moscow of wanting to take over the province, and launched its new assault in an apparent bid to stamp its authority on South Ossetia.

During the night, Georgian forces fired more than a dozen missiles towards South Ossetia from inside Georgia.

The Russian military said more than 10 Russian peacekeepers had been killed in Tskhinvali when Georgian shells hit their barracks.

Georgia said it had shot down five Russian jets and that Russian aircraft had attacked a military base near Tbilisi. Russia denied it had lost any planes. It claimed control of the South Ossetian capital.

Russian Prime Minister Vladimir Putin declared that "war has started".