Georgian President Mikhail Saakashvili had declared a unilateral ceasefire late on Thursday, soon before the UN Security Council gathered for an emergency meeting amid fears of full-scale war breaking out in the region.
The South Ossetian government said in a statement: "A column of Georgian tanks and infantry is moving toward [regional capital] Tskhinvali. A large part of the city has already been destroyed." (VIDEO)
Over 15 civilians have been killed, according to preliminary reports.
Several buildings are on fire in central Tskhinvali, and the local parliament building has burned down, the statement said.
A correspondent for Georgia's Imedi radio said the city has now been seized by Georgia, but the report has not been confirmed by other sources.
The rebel administration also said Georgian Su-25 attack planes have bombed the South Ossetian village of Kvernet and a humanitarian aid convoy.