MOSCOW, August 10 (RIA Novosti) - Russian peacekeepers in Georgia's breakaway republic of South Ossetia said on Sunday that Georgian forces remain in the region, and are shelling apartment blocks in the capital.

Georgian Interior Ministry spokesman Shota Utiashvili earlier said Georgian forces had fully withdrawn from the separatist province.

A spokesman for the peacekeeping command told RIA Novosti: "This statement is a lie, just like [Georgian President Mikheil] Saakashvili's statement on the impossibility of using military force in conflict zones."

Russian and South Ossetian officials say around 2,000 of the province's residents have been killed since Georgia began its ground and air offensive on South Ossetia on Friday.

Russian Prime Minister Vladimir Putin, who visited Russia's North Ossetia, where thousands of refugees from the Georgian province are being housed, called the killings an act of genocide.

At a meeting with refugees at a makeshift hospital camp in Alagir on Saturday, eyewitnesses told the premier how Georgian troops had set fire to a house with several young women inside.

"They were rounded up like cattle, shut into the house, and set on fire. In another place, we saw a tank run over an old woman who was running away with two children. We saw how they slashed up an 18-month child," a refugee said.

Putin told the gathering: "This is full-scale genocide... They have completely lost their minds."

Speaking at a conference in the North Ossetian city of Vladikavkaz, Putin called Georgia's actions "a crime first and foremost against their own people."

Russia's retaliation is "absolutely justified and legitimate from a legal point of view," he said.

Georgia launched a major ground and air offensive to seize control of South Ossetia on Friday, prompting Russia to send in tanks and hundreds of troops. Georgia imposed martial law on Saturday after Russian warplanes began bombarding military bases. South Ossetia's capital Tskhinvali has been largely destroyed in the violence.

After returning to Moscow on Sunday, Putin said Russia's government will provide $10 billion rubles ($420 million) in aid for South Ossetia.