Georgian forces and South Ossetian separatists have been exchanging heavy fire just hours after agreeing to a ceasefire and Russian-mediated talks.
Russian media reports said Georgia had launched a tank-led attack on the separatist stronghold of Tskhinvali, and airstrikes on rebel positions.
Georgia says it aims to finish "a criminal regime" and restore order.
At least 15 people are reported dead. Moscow called on the world community to work "to avert massive bloodshed".
As heavy clashes are reported in South Ossetia, Russia and Georgia have swapped increasingly angry accusations.
Georgia's President Mikhail Saakashvili has called upon his country to "mobilise" in the face of "a very blunt Russian aggression".
Russian Foreign Minister Sergei Lavrov said Moscow had reports of "ethnic cleansing" in villages.
Russian tanks have reportedly moved towards the capital of the region, which has been under heavy bombardment from Georgian forces.