TBILISI, August 10, 2008 (AFP) - Russia and Georgia were locked Sunday in an escalating battle over South Ossetia as Tbilisi sought international intervention against what it says is a policy of 'annihilation.'

Georgian and Russian forces exchanged artillery fire overnight, South Ossetia said, after Russian planes staged bombing raids across Georgia in a major escalation of the conflict that has reportedly already claimed over 2,000 lives.

US President George W. Bush led a chorus of international calls to end to the bombardment amid fears the conflict would spread to other parts of the volatile Caucasus region.

Russian and Georgian forces exchanged artillery fire overnight in the capital Tskhinvali, which both sides claim to control, the South Ossetian authorities said in a statement.

Russian warships headed for the coast, Foreign Minister Eka Tkeshelashvili said Saturday after air raids on the port of Poti and the city of Gori, where inhabitants said scores of people were killed.

Russia backs the separatist government in South Ossetia and sent in tanks and troops on Friday in response to pro-Western Georgia's military offensive to take back the province which broke away in the early 1990s after a separatist war.

As the fighting escalated, the leaders of Russia and Georgia stepped up their war of words.

'What they are doing is nothing to do with conflict, it is about annihilation of a democracy on their borders,' Georgian President Mikheil Saakashvili said in an interview with the BBC.

Saakashvili declared a 'state of war' in his country on Saturday but also offered a ceasefire to Russia.

Russia's President Dmitry Medvedev said his country had launched its operation to 'force the Georgian side into peace.' He later said he would order an investigation into accusations by South Ossetian refugees of Georgian acts of genocide.

Fears of the conflict spreading added urgency to international calls for a ceasefire.

Britain said a joint European-US mission was due to have arrived in Georgia late Saturday to try to help broker a ceasefire with Russia.

But a meeting of the UN Security Council on Saturday failed to agree on a call for an immediate ceasefire.

France, which holds the EU presidency, announced that it would host a meeting of European foreign ministers early next week and an emergency EU summit could be held.

The European Union 'strongly states its commitment to the sovereignty and the territorial integrity of Georgia and its internationally recognised borders and urges Russia to respect them,' said a statement released by France.

The EU 'underscores that the military actions (against Georgia) could affect EU-Russian relations,' it added.

French Foreign Minister Bernard Kouchner will visit the region to present settlement proposals, France said.

US President George W. Bush cut into his engagements during a visit to Beijing to call for an end to Russian bombing.

'We have urged an immediate halt to the violence and a stand-down by all troops,' Bush told reporters. 'We call for an end to the Russian bombings.'

Georgia said a Russian air raid had 'completely devastated' the Black Sea port of Poti in attacks that the country's UN ambassador likened to 'a full-scale military invasion'.

This was followed up with air raids on Gori, the main Georgian city closest to South Ossetia.

Apartment blocks in Gori were left in flames and residents said scores of people were killed. Georgian television showed images of the body of a pilot from a Russian jet shot down.

The conflict spread to Abkhazia, another breakaway region of Georgia, where the separatist government said its forces had launched attacks on Georgian troops. Georgia accused Russia of staging the attacks in the Kodori Gorge region, the only part of Abkhazia controlled by Georgia.

Russian Prime Minister Vladimir Putin flew to the city of Vladikavkaz, close to Russia's border with Georgia, to meet with South Ossetian refugees and said Russia had been right to launch its offensive.

'From a legal point of view our actions are absolutely well-founded and legitimate and moreover necessary,' Putin said, blasting Georgia's 'criminal' leadership.

The conflict with Russia has claimed 150 Georgian lives, the foreign minister said, and Russian officials have said at least 2,000 people have lost their lives in South Ossetia.

South Ossetia broke from Georgia in the early 1990s. It has been a constant source of friction between Georgia and Russia, which opposes Tbilisi's aspirations of joining NATO and has supported the separatists without recognising their independence.