Русская версияRussia has approved a plan intended to end fighting with Georgia, brokered by French President Nicolas Sarkozy.
Mr Sarkozy, whose country holds the EU presidency, is now in Tbilisi trying to persuade Georgians to accept the deal.
Under the plan, both sides would agree not to use force, and all troops would return to the positions they were in before the conflict began last week.
Earlier, Russia announced its military activity in the area was completed and witnesses reported troops pulling back.
But despite the diplomacy and apparent withdrawal, rhetoric on both sides has remained fiery and analysts predicted a long road to peace. See map of the region
Fighting flared last Thursday night with Georgian bombing in South Ossetia - a region nominally part of Georgia, but with de facto independence and where a majority of people hold Russian passports.
Russia moved in forcefully, sending troops into South Ossetia and Abkhazia, another breakaway province. Georgian towns away from the two regions were also bombed.
Some 100,000 people are estimated to have been displaced by the conflict.
Several countries, including the US, a major ally of Georgia, have been critical of Moscow's actions.
Reacting to Russia's ceasefire declaration, Secretary of State Condoleezza Rice said it was now vital for all sides to stop fighting, adding that Russian military operations "really do now need to stop because calm needs to be restored".
'Lunatics' gibe
Mr Sarkozy, in his current role as EU president, held talks with Russian President Dmitry Medvedev in Moscow for most of the day.
In a joint news conference, they said a six-point peace plan had been agreed by Russia.
The deal included a pledge to begin international discussions about the future status of South Ossetia and Abkhazia.
If Georgia agrees to the plan, Mr Medvedev said the "path to a gradual normalisation" in South Ossetia was open.
But during the same press conference, Mr Medvedev called Georgian troops "lunatics" and accused Mr Saakashvili of lying over a previous ceasefire agreement.
And just hours earlier, tens of thousands of Georgians gathered in Tbilisi's main square to hear Mr Saakashvili claim that Russia was continuing its "ruthless, heartless destruction" of Georgian citizens.
Neither side's claims could be verified, but analysts point out that the inflamed rhetoric signifies how far away from an agreement they are.
Mr Sarkozy landed in Tbilisi late on Tuesday for talks with President Mikhail Saakashvili.
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(BBC)
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