Nato foreign ministers are meeting in Brussels for emergency talks to discuss how the alliance should respond to Russia's military action in Georgia.
The OSCE says Russia has agreed to let 20 military observers in Georgia and is awaiting Tbilisi's green light.
Earlier in a gesture of goodwill, Russian and Georgian troops exchanged prisoners at a checkpoint near the Georgian capital, Tbilisi.
But Tbilisi says Russia is not pulling out of Georgia, a charge Moscow denies.
The 20 observers will supplement the current nine OSCE observers already based in South Ossetia, says the chairman of the Organization for Security and Co-operation in Europe, Finnish Foreign Minister Alexander Stubb, speaking on the sidelines of the Nato talks.
Officials in Tbilisi said there was no evidence that Russian troops were leaving Georgian territory, but the Russian defence ministry said the redeployment had begun and would be complete within days.
The exchange of 15 Georgian soldiers for five Russian soldiers took place at a Russian checkpoint in Igoeti, about 30km (18 miles) away from Tbilisi, the Georgian capital.
The BBC's Helen Fawkes, at the scene, saw two injured Russians, brought to the checkpoint by ambulance, carried on stretchers by Russian soldiers before being put onto waiting helicopters and taken away.
Two of the Russians were pilots who had been shot down, Georgian officials told the BBC.
A few minutes' walk from the site of the exchange, a noisy protest was held by several hundred Georgians demanding that Russia withdraw its forces, our correspondent adds.
The conflict broke out on 7 August when Georgia launched an assault to wrest back control of the Moscow-backed breakaway region of South Ossetia, triggering a counter-offensive by Russian troops who advanced beyond South Ossetia into Georgia's heartland.
A ceasefire was signed at the weekend, with Moscow pledging to begin pulling back its troops on Monday, but correspondents say there has so far been little sign of any large-scale force withdrawal.
Nato rift
As Nato's 26 foreign ministers meet in Brussels, the BBC's Jonathan Marcus says there is disagreement among the alliance as to how to respond, so the focus will be on where members can agree.
It is thought that in one camp, the UK, Canada, the US and most Eastern European member states will seek a tough stance on Russia, but most of Western Europe, led by France and Germany, is expected to be more cautious of harming ties with Moscow.
Flying to the Nato meeting, Ms Rice told reporters on Monday: "We have to deny Russian strategic objectives, which are clearly to undermine Georgia's democracy, to use its military capability to damage and in some cases destroy Georgian infrastructure and to try and weaken the Georgian state."
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PEACE PLAN
No more use of force
Stop all military actions for good
Free access to humanitarian aid
Georgian troops return to their places of permanent deployment
Russian troops to return to pre-conflict positions
International talks about security in South Ossetia and Abkhazia |
Our correspondent says the talks, called at the Americans' request, looks set to offer strong support to the government in Tbilisi, stressing Nato's commitment to Georgia's sovereignty.
A Nato spokeswoman told AFP news agency: "I think you can expect a strong message to Russia."
The alliance is also expected to reiterate its backing for the agreement it reached in Romania back in April that Georgia will one day be offered membership of Nato, without setting any dates.
Nato is also expected to offer more humanitarian aid and proposals on how to rebuild Georgian infrastructure damaged in the conflict.
Our correspondent says Nato's immediate diplomatic goals are a full Russian withdrawal, an enhanced observer force and, ultimately, a more neutral peacekeeping arrangement.
He says high-level contacts between Nato and Russia could be suspended if Russians do not pull back to the positions their peacekeepers occupied before the hostilities.
The sight of GWB [US President George Bush] complaining about Russia's "disproportionate use of force" is hilarious
Max, London
Washington has denied claims from Moscow that it is out to wreck the Nato-Russia Council - a consultative panel set up in 2002 to improve ties between the former Cold War enemies.
Dmitry Rogozin, Russia's ambassador to Nato, said on Monday he hoped the "decisions by Nato will be balanced and that responsible forces in the West will give up the total cynicism that has been so evident [which] is pushing us back to the Cold War era", reported the Associated Press news agency.
Georgian President Mikhail Saakashvili struck a conciliatory tone on Monday as he called for talks with Russia, saying: "Let's resolve problems through civilised methods."
Source: bbc.co.uk/
We hope the decisions by Nato will be balanced and that responsible forces in the West will give up the total cynicism that has been so evident [which] is pushing us back to the Cold War era 
