Russian President Dmitry Medvedev announced today that he had signed a decree recognising the Georgian breakaway regions of South Ossetia and Abkhazia as independent states.
He also ordered the Russian foreign ministry to establish diplomatic ties with the regions.
"I signed decrees on the recognition by the Russian Federation of the independence of South Ossetia and Abkhazia,'' Mr Medvedev said on television today. "Russia calls on other states to follow its example."
US President George W. Bush tonight condemned the move, saying Russia's action only served to exacerbate tensions and complicate diplomatic negotiations.
Mr Bush said it was inconsistent with numerous United Nations Security Council resolutions that Russia has voted for in the past.
"It is also inconsistent with the French-brokered six-point ceasefire agreement which President (Dmitry) Medvedev signed," he said in a statement from his Texas ranch.
"In accordance with United Nations Security Council resolutions that remain in force, Abkhazia and South Ossetia are within the internationally recognized borders of Georgia, and they must remain so."
The Minister for Foreign Affairs, Micheál Martin, also condemned the decision by Russia. “This deeply regrettable decision is contrary to the principles of Georgia’s sovereignty, independence and territorial integrity," Mr Martin said.
"Moreover, it can only complicate the urgent task of finding political solutions to the acute difficulties in the region and to the wider international tensions which have developed over the past weeks.”
Residents in Abkhazia fired into the air, opened bottles of champagne and wept as the news filtered through, however. In Sukhumi, Abkhazia's capital on the Black Sea coast, office workers spilled into the streets to celebrate moments after the announcement was made.
Georgian President Mikheil Saakashvili rejected as "completely illegal" the Russian move.
In a televised address, Mr Saakashvili said the protection of Georgia's territorial integrity was not only an issue for Russia and Georgia, "but for Russia and the rest of the civilised world."
"This decision is completely illegal and has no legal basis," Mr Saakashvili said.
Britain, France and Italy were also quick to condemn Russia's announcement saying Mr Medvedev's decision did "nothing to improve the prospects for peace in the Caucasus".
"(The European Union presidency) firmly condemns this decision," Mr Sarkozy's office said in a statement.
"It calls for a political solution to the conflicts in Georgia. It will examine the consequences of Russia's decision from this point of view," it added.
Mr Sarkozy called an emergency meeting of EU leaders next week to agree on a response to Russia's failure to withdraw its troops from Georgia completely.
UN Secretary-General Ban Ki-moon said he fears that Russian recognition of Georgian rebel regions may complicate Security Council efforts for a solution, his spokeswoman said.
British Foreign Secretary David Miliband called for an international coalition to counter Russia's recognition of two breakaway regions of Georgia.
"Today's announcement by President Medvedev that Russia will recognise South Ossetia and Abkhazia is unjustifiable and unacceptable," Mr Miliband said.
"I am holding talks today with international partners and will be visiting Ukraine tomorrow to ensure the widest possible coalition against Russian aggression in Georgia.
"Today's announcement further inflames an already tense situation in the region. We fully support Georgia's independence and territorial integrity, which cannot be changed by decree from Moscow," Mr Miliband added.
Italian Foreign Minister Franco Frattini said the decision complicates an already complicated situation. "It's a unilateral decision that doesn't have international support that makes it legally binding.''
German Chancellor Angela Merkel said respect for territorial integrity is "one of the basic principles of international cooperation," adding that the European Union will back the principle when its leaders meet on September 1st.
Alexander Stubb, chairman in office, Organisation for Security and Cooperation in Europe (OSCE) also rebuked Russia over its move.
"The recognition of independence for South Ossetia and Abkhazia violates fundamental OSCE principles," Mr Stubb said.
"Russia should follow OSCE principles by respecting the territorial integrity and sovereignty of Georgia. Russia should immediately withdraw all troops from Georgia and implement the ceasefire agreement. The international community could not accept unilaterally established buffer zones."
Meanwhile Mr Medvedev has accused the US of shipping arms to Georgia on US naval vessels in Georgia's Black Sea port of Poti.
When asked if Russia was mounting a blockade of ships off Poti, Mr Medvedev replied: "There is no blockade. Any ship can get in, American and others are bringing in humanitarian cargoes.
"And what the Americans call humanitarian cargoes - of course, they are bringing in weapons," he told a BBC interview.
The US tonight announced it had scrapped a plan to deliver relief supplies to Georgia's flashpoint port of Poti tomorrow, a source close to the US embassy in Tbilisi said.
Russian forces also pushed Georgian police out of a disputed village on the de facto South Ossetian border today after a tense stand-off that underlined the fragility of their peace.
The Russian advance followed several days of posturing by heavily armed Georgian special police and South Ossetian separatists at positions a few hundred metres (yards) apart near the village of Mosabruni.
The area is mainly populated by Georgians. Russian troops pulled out of the village last week after pouring over Russia's southern border this month to repel an offensive by Georgian forces to retake South Ossetia from pro-Moscow separatists.
Georgian police and separatist soldiers had been jostling to fill the vacuum before Russian soldiers backed by a low-flying Mi-24 helicopter gunship rolled back into the village and ordered the Georgian police to pull out.
Reuters