Medvedev spokesman Alexei Pavlov said Medvedev signed the agreement in the resort city of Sochi, where the President has a summer residence, but did not give further details. It was not clear if any troops had begun pulling back after Medvedev signed the ceasefire.

Terming Russia’s signing of the peace deal as a “hopeful step”, US President George W Bush said Russia cannot lay claim to South Ossetia and Abhkhazia and should end military operations there.

Bush also asked Russia to honour the agreement by withdrawing forces and ending military operations from Georgia and said that the two breakaway regions lie within the “internationally recognised” borders.

The agreement was signed by Georgian President Mikhail Saakashvili the day before. It calls for both sides forces to pull back to positions they held before fighting erupted August 8. The Russian Army quickly overwhelmed the forces of its small US-backed neighbour and then drove deep into Georgia.

The shallow foxholes being gouged out of the earth at Igoeti on Saturday could indicate the Russians’ intention to stay awhile. But they could be meant for defensive positions to guard their comrades as they withdraw.

Farther up the road toward Gori, a Russian armoured personnel carrier sat behind a newly made earthen embankment. Other military vehicles were on the roadside, camouflaged by tree branches.

Meanwhile, Azerbaijan suspended oil exports through ports in western Georgia on Saturday after an explosion damaged a key rail bridge there. Georgia accused Russian troops of blowing up a railway bridge west of the capital Tbilisi earlier in the day, saying its main east-west train link had been severed. Russia strongly denied any involvement.

The railway line runs runs from Tbilisi, through Gori, before splitting in three and running to the Black Sea ports of of Poti and Batumi and southwest to just short of the Turkish border.