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Foreign Minister Sergei Lavrov accused Nato of bias and of trying to save the "criminal regime" in Tbilisi.

He insisted Moscow was not occupying Georgia and had no plans to annex the separatist region of South Ossetia.

Earlier, Nato demanded that Russia pull out its troops from Georgia as agreed in an EU-brokered ceasefire plan signed by both parties at the weekend.

Russian President Dmitri Medvedev told his French counterpart Nicolas Sarkozy in a phone call that the pull-out would be complete by 21-22 August, with the exception of some 500 troops, who will be installed in peacekeeping posts on either side of South Ossetia's border.

Some Russian troops have been seen leaving Gori, the largest Georgian town close to the South Ossetia border.

But BBC correspondents on the ground say there are still Russian artillery positions in place. In addition, there are Russian checkpoints close to the Georgian capital, Tbilisi.

Both sides have accused the other of violating the peace plan, and correspondents say there has so far been little sign of any large-scale withdrawal.

Buffer zone

Following crisis talks in Brussels, Nato's 26 foreign ministers said in a joint statement that they could not have normal relations with Russia as long as Moscow had troops in Georgia.

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

"The Alliance is considering seriously the implications of Russia's actions for the Nato-Russia relationship," the statement said, read out by Nato Secretary General Jaap de Hoop Scheffer.

"We have determined that we cannot continue with business as usual."

Mr de Hoop Scheffer added that he could not see how the Nato-Russia Council - set up in 2002 as a framework for dialogue - could convene at this time.

But he said lines of communication would not be abandoned.

He also said that the member states had agreed to set up a Nato-Georgia commission to strengthen ties with Tbilisi, but stopped short of giving a timetable for Georgia's accession to Nato.

In a televised address, Russia's foreign minister underlined Moscow's view that Russian troops only entered South Ossetia after Georgia tried to reintegrate the breakaway region by force.

Sergei Lavrov accused Nato of being "unobjective and biased".

"It appears to me that Nato is trying to portray the aggressor as the victim, to whitewash a criminal regime and to save a failing regime," he said.

Earlier, the Russian military warned that the withdrawal would be slow until the weekend at least, and that troops would remain in an undefined buffer zone around South Ossetia.

It said such a move was permitted under the ceasefire deal which allowed Russia to take additional security measures until international peacekeepers were deployed.

But Georgia accused Moscow of going much further, saying Russian troops have seized control of a key commercial port in Poti in an attempt to cripple the Georgian economy.

Georgian officials told the BBC's Helen Fawkes, who was at the scene, that two of the Russian prisoners were airmen who had been shot down by Georgian forces about two weeks ago.

Meanwhile, the Organisation for Security and Co-operation in Europe (OSCE) said Russia and Georgia had agreed to allow 20 extra military observers to be deployed in and around South Ossetia.

In total, the OSCE said it would send up to 100 additional monitors to join the handful it already has in Georgia.

The OSCE has had a presence in South Ossetia since the end of a civil war there in the early 1990s, which resulted in de facto independence for the region.

It also supports a UN-led peace process in Georgia's other separatist region of Abkhazia.