Russian tanks are moving towards the capital of Georgia's separatist region of South Ossetia which has been under heavy bombardment from Georgian forces, reported BBC.
Georgian troops are currently observing a three-hour ceasefire to let civilians leave the besieged capital, Tskhinvali.
Georgia is reported to have said any involvement of Russian forces in the conflict will result in a state of war between the two countries.
Reports from Georgia claim Russian jets have attacked an airport near Tblisi.
Nato, the US and the EU have all called for an immediate end to hostilities.
At least 15 civilians are reported dead, as well as several Russian peacekeepers based in Tskhinvali.
Georgian President Mikhail Saakasvili, who has called on reservists to sign up for duty, said "150 Russian tanks, armoured personnel carriers and other vehicles" had entered South Ossetia.
"This is a clear intrusion on another country's territory. We have Russian tanks on our territory, jets on our territory in broad daylight," Reuters new agency quoted him as saying.
"I must also tell you that Georgian forces have downed two Russian jet fighters over Georgia's territory."
Russia rejected claims its fighters had attacked Georgian targets and that any had been shot down.
But Russian President Dmitry Medvedev has promised to defend Russian citizens in South Ossetia.
"I must protect the life and dignity of Russian citizens wherever they are," Interfax quoted him as saying. "We will not allow their deaths to go unpunished. Those responsible will receive a deserved punishment."
Residents of Tskhinvali were reported to have been sheltering in basements as massive explosions rocked the city. Georgian jets also targeted separatist positions. Both sides blamed each other for breaking an earlier ceasefire agreed on Thursday.
Georgian Foreign Minister Ekaterine Tkeshelashvili told the BBC the present situation was calm as Georgian troops were observing a unilateral ceasefire which started at 1100GMT.
She said they wanted to ensure that any civilians who wanted to leave the conflict zone could do so safely.