OLEG KALCHAKEYEV sighed with relief as he watched the evening news on Thursday.

The reports told of renewed skir-mishes between separatist rebels seeking South Ossetian independence and the Georgian army – but also revealed that Mikhail Saakashvili, Georgia’s president, had declared a ceasefire. On Friday, so the young leader said, the two sides would sit down to negotiate.

Kalchakeyev, a car mechanic from Tskhinvali, the South Ossetian capital, told his son: “At least we’ll be able to watch the Olympics.”

Only a few hours later, however, shortly before dawn, Kalchakeyev woke up to the sound of explosions. He looked out of the window and saw the night sky over Tskhinvali filled with tracer fire. A barrage of Grad and Katyusha rockets followed.

It is unclear who first violated the ceasefire, but less than eight hours after Saakashvili’s pledge, the Georgian president had ordered his troops to retake South Ossetia by force.

“Suddenly there was a massive explosion which hit a house down the road from us,” said Kalchakeyev, who managed to flee across the border to Russia.

“Our windows shattered and I jumped for cover. I grabbed my son and wife and ran down to the basement, where I was joined by dozens of other civilians. The bombing only got worse. It was relentless and went on for hours. I never thought it would come to this – Georgians bombing us – not in my wildest imagination.”

As Vladimir Putin and George W Bush gathered with world leaders at the so-called bird’s nest stadium in Beijing for the Olympic opening ceremony, war was breaking out between Putin’s Russia and Bush’s client state Georgia.

Within hours, Russia sent its tanks rampaging into South Ossetia – even though it still officially recognises it as Georgian sovereign territory – and yesterday it ordered its air force to attack Georgian targets.

Apartment blocks were on fire in Gori, 15 miles from South Ossetia. Afterwards, a woman knelt in the street and screamed over the body of a dead man.

Another old woman covered in blood stared into the distance, and a man knelt by the road, his head in his hands.

“Why do I have to go through this again?” asked one woman, who said she had survived the second world war. “Why can’t we just live in peace?”

A wave of shock and apprehension gripped the region as survivors asked themselves whether Georgia was about to follow Chechnya into another Caucasian war.

Yesterday it emerged that Tskhinvali, a quiet, small town, had been all but destroyed by the initial Georgian attack on Friday.

As a barrage of artillery fell on its outskirts, Georgian tanks moved into the centre, where they were met with fierce resistance from South Ossetian separatist rebels.

“Georgian snipers are taking down anything that moves, even outside the town’s hospital, which is making it hard to deliver the wounded. They are not sparing anyone,” claimed a South Ossetian government spokesman.

The presidential palace of a region of only 70,000 inhabitants was in flames as intense hand-to-hand fighting broke out across the town. Ordinary apartment blocks were pounded as the remains of Georgian tanks struck by rocket-propelled grenades stood burning in the middle of the street.

“It’s hell,” said Zara Valiyeva, a local journalist trapped in the city. “Houses are being hit around us by rockets. We have no food but it’s too dangerous to go out.”

Battered Ladas delivered the wounded to the town’s hospital, which according to several reports was also badly hit.

“There were bodies lying everywhere, in the streets, around ruined buildings, in cars. There is hardly a single building left undamaged,” said Ludmilla, a woman who fled the town during the fighting.

“The city is burning,” stated a local resident, Oleg Repukhov, in a text message from a basement he took refuge in.

“Grad missiles are falling. They are taking the city. We are running out of ammunition. Where’s our f***ing help!!?” he wrote before the line went down.

“We never thought this could happen,” said Fatima Kochieva, a 47-year-old mother of two who lived on Tskhinvali’s southern outskirts, where the first Georgian artillery shells landed. “It all happened so quickly. Suddenly we were in the middle of heavy fighting. I saw our neighbour’s house get a direct hit. I took cover with the kids in the basement. It was terrifying.”

It took the Georgian army, which in the past few years has received US training and equipment, only a few hours to take the town.

Huge bomb craters cut through the streets. Blackened Soviet-era apartment block buildings were in flames; dead bodies of fighters and civilians lay on the ground amid the rubble. The remains of Georgian armed vehicles hit by grenades lay upside down close to the central square. Power and water supplies were cut off.

“The town is destroyed. There are many casualties, many wounded,” said Zaid Tsarnayev, a resident. “I was in the hospital on Friday where I saw many civilian wounded. The hospital was later destroyed by a Georgian jet.”

Russia’s response to the crisis was swift. Tank columns from the 58th army rolled across the border into South Ossetia. Backed by Russian fighter jets that pounded the Georgian army’s position, they quickly advanced towards Tskhinvali.

“Russia will not close its eyes on the deaths of Russian citizens in South Ossetia,” warned Dmitry Medvedev, the new Russian president.

Hundreds of volunteers from across the Caucasus – including scores of Cossacks – continued to cross into the disputed enclave to help the South Ossetian separatists.

Yesterday morning the Russians stepped up the pressure by sending in their Spetsnaz special forces. Clashes were reported in and around Tskhinvali but by midday the Russians had pushed the Georgians back, establishing a big military presence that Moscow will argue needs to stay for the fore-seeable future as a “peacekeeping” force.

Georgia’s interior ministry claimed that Russian warplanes had bombed a military base on the outskirts of the Georgian capital, Tbilisi, and three military bases on the Black Sea port of Poti. Russia denied the claims. Georgia also claimed to have shot down 10 Russian planes. The Russians said they had lost two.

It was when Russian jets attacked Gori, a small Georgian town to the south of the fighting, that the worst bloodshed occurred.

Richard Galpin of the BBC was the first foreign reporter on the scene. He said: “We saw the impact of the air strikes – buildings on fire. We could hear the Russian jets above us. In one strike the pilot missed the intended military base, instead hitting two apartment blocks.

“When we arrived, flames were pouring out of the buildings and people were still trapped inside. We saw injured civilians being pulled from the buildings.”

Roots of the conflict

Why is the Caucasus so important?

Because it is the only route for Central Asian oil supplies that does not cross Russia. Throughout the 19th century Russia fought wars to control the region and Moscow considers the area a key part of its sphere of influence.

Why does South Ossetia want to break away?

Most of its people speak their own language and feel closer to the Russians than the Georgians. They say they were absorbed into Georgia after the fall of the old Soviet Union. The 70,000 South Ossetians want independence – just like Kosovo, the breakaway Serbian province.

Why are the Georgians so upset about South Ossetia?

Because they see it as a Russian outpost funded largely from Moscow, and where most people carry Russian passports.

Why has Georgia’s president chosen to raise the issue now?

Because he thought everyone was focused on the Olympics and the Russians would hesitate to respond with force.

Why has Russia been willing to go to war?

The Kremlin is angry about western, particularly American military support for Georgia, its desire to join Nato and US plans for a missile defence shield in Europe.

Will anyone else intervene?

Unlikely, western armies are busy and the prospect of taking on Russia is not enticing.

What happens next?

The Georgians will back down looking like the bad guys. Both sides will go back to hating each other. Result: Russia 1, Georgia 0.

See pictures from the conflict

www.timesonline.co.uk/tol/news/world/europe/article4493620.ece