From the BBC:
Russian jets have bombed a Georgian town amid a deepening crisis over the breakaway South Ossetia region.
Georgia says 60 people died in Gori when the bombs hit residential buildings as well as military targets.
Russian officials say hundreds of civilians have been killed in South Ossetia. Georgia denies the figure, which cannot be independently verified.
The Georgian parliament has meanwhile approved a presidential decree declaring a state of war for 15 days.
Reports differ over who controls South Ossetia's capital, with Moscow saying it has "liberated" Tskhinvali.
Russian President Dmitry Medvedev said his country was seeking "to force the Georgian side to peace".
Russia's ambassador to Nato, Dmitry Rogozin, said there could be no "consultations" with Georgia until Georgian forces returned to their positions and re-established "the status quo", Reuters news agency reported.
In another development, separatists in Abkhazia - Georgia's other breakaway region - said they had launched air and artillery strikes on Georgian forces in the Kodori Gorge.
The crisis began spiralling when Georgian forces launched a surprise attack on Thursday night to regain control of South Ossetia, which has had de facto independence since the end of a civil war in 1992.
The move followed days of exchanges of heavy fire with the Russian-backed separatists.
In response to the Georgian crackdown, Moscow sent armoured units across the border into South Ossetia.
Georgian President Mikhail Saakashvili has denounced Russian reports of a high civilian death toll from his forces as an "egregious lie".
Mr Saakashvili said he had decided to declare that Georgia was in a state of war because it was "under a state of total [Russian] military aggression".
Georgia is withdrawing its entire contingent of 2,000 troops from Iraq to help deal with the crisis.
US President George W Bush said the Russian attacks outside South Ossetia marked a "dangerous escalation in the crisis" and said Georgia's territorial integrity had to be respected.
"The attacks are occurring in regions of Georgia far from the zone of conflict in South Ossetia," he said while attending the Olympics.
"The violence is endangering regional peace."
Fighting continued around Tskhinvali overnight and into Saturday morning, although not at the same intensity as on Friday, Russian media reported.
Later, the Russian Army's Ground Forces commander, Gen Vladimir Boldyrev, said his troops had "fully liberated" the city and were pushing Georgian forces back.
But the secretary of the Georgian National Security Council, Khakha Lomaia, insisted that the city remained "under the complete control of our troops".
Russian commanders, who said reinforcements were being sent to the region, confirmed that two Russian jets had been shot down over Georgia.
Speaking to Russian news agency Interfax, Russia's ambassador to Georgia, Vyacheslav Kovalenko, said on Saturday that 2,000 civilians and 13 Russian peacekeepers had been killed in Tskhinvali.
"The city of Tskhinvali no longer exists," he said. "It is gone. The Georgian military has destroyed it."
The International Red Cross (ICRC) said it had received reports that hospitals in the city were "overflowing" with casualties.
In Gori, Russian aircraft bombed mostly military targets, where Georgian troops had been massing to support their forces engaged in South Ossetia.
The BBC's Richard Galpin in Gori heard loud explosions and saw large plumes of smoke rising into the sky; soldiers and civilians were seen running through the streets.
Injured civilians were being pulled from the buildings, which were on fire.
The Georgian foreign ministry said the Black Sea port of Poti, the site of a major oil shipment facility, had been "devastated" by a Russian air raid.
Meanwhile Georgian TV reported that the Georgian-controlled section of the Kodori Gorge in Abkhazia was under fire, blaming the bombardment on Russian forces.
The foreign minister in Abkhazia's self-declared government, Sergei Shamba, said Abkhaz forces had launched an attack aimed at driving Georgian forces out of the gorge.
It was not clear whether planes used in the attack on the gorge belonged to Russia or to the Abkhaz separatists.
Russia has a peacekeeping force in Abkhazia under an agreement made following civil wars in the 1990s, when the region declared independence and formed links with Moscow.
President Medvedev said Russia's military aim in South Ossetia was to force the Georgians to stop fighting.
"Our peacekeepers and the units attached to them [ie, Ossetian separatists] are currently carrying out an operation to force the Georgian side to [agree to] peace," he said.
"They also bear the responsibility for protecting the population."
Speaking to the BBC, the Russian foreign minister insisted his country did not want all-out war with Georgia, but was prepared to do whatever was necessary to restore the situation in South Ossetia and to defend its civilian population, most of whom have been given Russian citizenship.
"Mr Saakashvili keeps saying that we want to chop off a part of Georgian territory," Mr Lavrov said.
"He's also saying that this is not just about Georgia, this is about the future of Europe because he says Russia is also making territorial claims to other [countries], including the Baltic states, which is rubbish."
Mr Lavrov said Georgia had violated a peace deal under which Georgia had agreed not to use force in the South Ossetian dispute.
The BBC's James Rodgers in Moscow says diplomatic initiatives to end the fighting have so far proved fruitless.
On Friday evening, the UN Security Council failed to agree on the wording of a statement calling for a ceasefire.
The UK, the US and France, are pinpointing what they say is Russia's aggression as the key factor in the slide towards war, while Moscow insists Georgia is to blame.