Georgian President Mikhail Saakashvili said in a television interview that Russia was fighting a war with his country, Reuters reported.
"We have Russian tanks moving in. We have continuous Russian bombardment since yesterday ... specifically targeting the civilian population," Saakashvili told CNN. "Russia is fighting a war with us in our own territory."
Georgian army units worked to seize Tskhinvali, the capital of the pro-Russian province, using machine guns and mortars to battle separatist paramilitary fighters, said Shota Utiashvili, a Georgian Interior Ministry official, according to The New York Times.
Utiashvili said troops would hold a 3-hour cease-fire to allow civilians to leave the capital.
Russia's Interfax news agency quoted South Ossetia's rebel leader Eduard Kokoity as saying there were "hundreds of dead civilians" in Tskhinvali, according to Reuters.
"I saw bodies lying on the streets, around ruined buildings, in cars," Lyudmila Ostayeva, 50, who had fled to a nearby border village told the Associated Press. "It's impossible to count them now. There is hardly a single building left undamaged."
The head of a Russian peacekeeping force in the city, Marat Kulakhmetov, told the Times that the city had come under "massive attack" by Georgian forces and that civilians had been wounded.
A Russian military officer says that 10 Russian peacekeepers have been killed in the fighting and another 30 wounded in South Ossetia, the AP reported.
Three Russian jets bombed the town of Gori and the villages of Kareli and Variani, wounding seven civilians, Georgian Deputy Interior Minister Eka Sguladze said at a briefing, according to the AP.
Georgian officials said their military had fired on Russian planes and a convoy of tanks, which Russia said was there for humanitarian purposes.
"This was a very blunt Russian aggression. ... We are right now suffering because we want to be free and we want to be a multi-ethnic democracy," said Saakashvili in the CNN interview.
"We are in this situation of self-defense against a big and mighty neighbor. We are a country of less than 5 million people and certainly our forces are not comparable," he said.
Russian President Dmitry Medvedev vowed to defend "compatriots" in South Ossetia. Up to 90 percent of the residents in South Ossetia have Russian passports.
"Under the Constitution and the federal law ... I must protect the life and dignity of Russian civilians wherever they are," he said in a televised address, Reuters reported.
The United States, European Union and NATO have called for an immediate end to the fighting, according to Bloomberg News. NATO Secretary General Jaap de Hoop Scheffer said the alliance is closely monitoring the situation.
Georgia was ruled by Moscow for 200 years preceding the breakup of the Soviet Union in 1991.
South Ossetia and another province, Abkhazia, have operated with autonomy since splitting from Georgia in the early 1990s and building ties with Moscow.
The U.S. planned to send an envoy to the region on Friday to meet with the parties involved to try to curb the hostilities.
"We support Georgia's territorial integrity," State Department spokesman Gonzalo Gallegos told reporters. "We are working on mediation efforts to secure a cease-fire."