'I have taken the decision to end the operation to force Georgian authorities into peace,' Mr Medvedev told defence chiefs at a meeting on the South Ossetia conflict.

Russian forces moved into Georgia on Friday after the Georgian army launched an offensive to bring South Ossetia, which broke away in the early 1990s, back under government control.

Russia says 2,000 civilians have been killed and the United Nations estimated that more than 100,000 people have been displaced.

'The purpose of the operation has been achieved.... The security of our peacekeeping forces and the civilian population has been restored,' Mr Medvedev added while insisting any new Georgian attacks would be 'liquidated.'

A senior Russian military commander said the halt in the Russian advance into Georgia did not mean all operations would end.

'If we have received the order to ceasefire, this does not mean that we have stopped all actions, including reconnaissance,' General Anatoly Nogovitsyn said.

Georgia, which had offered a ceasefire, said several Georgian villages were still being bombed. 'After the ceasefire agreement, three villages are being bombed,' a spokeswoman for the presidency, Nato Partskhaladze, told AFP. She said an ambulance had been hit in one, Agara.

In a show of defiance in the Georgian capital Tbilisi, more than 50,000 people crammed onto the main Rustaveli avenue where a sea of red and white flags hung above the crowds.

With nationalist sentiment running high, people handed out free T-shirts reading: 'We are together, we are united.'

Meanwhile, French President Nicolas Sarkozy arrived in Moscow to press a peace plan and told Medvedev the ceasefire was 'good news' but that it had to be implemented.

'It's perfectly normal that Russia would want to defend the interests both of Russians in Russia and Russophones outside Russia,' Sarkozy said.

'It is also normal for the international community to want to guarantee the integrity, sovereignty and independence of Georgia,' the French leader added.

Russia's armed forces had already struck new blows Tuesday in their five day old offensive.

Warplanes bombed the key city of Gori, Georgia's security council said. The city's central square was hit and a Dutch cameraman and a Georgian journalist were killed, officials said.

The Russian air force also attacked the key Baku-Tbilisi-Ceyhan (BTC) oil pipeline near Rustavi, but it was not known if it was damaged, security council chairman Alexander Lomaia said.

Georgia's pro-Western President Mikheil Saakashvili said on Monday that 'the majority of Georgia's territory is occupied' and that the Russian military threatened Tbilisi.

Before Mr Medvedev's dramatic announcement, Russia had resisted international calls for a ceasefire.

Russia's Foreign Minister Sergei Lavrov said the 'only way' to end fighting in Georgia is with a total Georgian withdrawal from South Ossetia. He also said Saakashvili should leave office.

'It would be best if he left,' Mr Lavrov told a news conference.

'I don't think Russia will feel like talking with Mr Saakashvili after what he did to our citizens,' Mr Lavrov said.

Russia strongly backs the separatist administrations in South Ossetia and a second region in western Georgia, Abkhazia.

Its forces moved briefly into the western city of Senaki on Monday and destroyed a military base, Russian and Georgian officials said.

Russian troops also entered Georgia's main Black Sea port of Poti in what Moscow called a reconnaissance mission.

Abkhaz forces had surrounded Georgian troops in the Upper Kodori Gorge, a sliver of the breakaway region still held by Georgian forces, reports said quoting Abkhaz separatists.

A Nato-Russia meeting in Brussels was scrapped with a spokesman for Russia's ambassador to the alliance saying this was 'due to the American position' on Georgia.

A Nato spokesman said the meeting had simply been postponed due to problems with timing.

US President George W. Bush, Georgia's main Western ally, on Monday issued his strongest condemnation yet of the Russian assault in Georgia.

'Russia's government must respect Georgia's territorial integrity and sovereignty,' Mr Bush said.

'Russia has invaded a sovereign neighbouring state and threatens a democratic government elected by its people,' he said. 'Such an action is unacceptable in the 21st century.'

At the United Nations, Russia's ambassador rejected a Western blueprint before the UN Security Council to end the fighting, based on the French plan.

'I cannot see us accepting this French draft,' said the ambassador, Vitaly Churkin.

The plan - already accepted by the Georgian leader - calls for an immediate truce, respect for Georgia's territorial integrity and a return to the status quo that prevailed before fighting erupted in South Ossetia.

Mr Churkin objected because the draft resolution did not refer to 'Georgian aggression and to the atrocities we have seen.' -- AFP