Helena Bedwell, a journalist based in Georgia's capital Tbilisi, told Al Jazeera that military action was called off earlier on Friday, but both sides were still blaming each other for starting the fighting.
"The Georgian side, which is still on high military alert, blames criminal gangs for starting the shooting and say they had no choice but to respond," she said.
"They also suspect Russian peacekeepers of some role, who they say are on the side of South Ossetia."
Georgia wants Russia removed from the region and replaced with international peacekeepers, who "would not be biased", Bedwell said.
In a statement released on Friday, the Russian foreign ministry said: "The actions of Tbilisi show that an open act of aggression has been committed against South Ossetia."
Russian news agencies also quoted the head of Russia's peacekeeping troops in South Ossetia as saying more soldiers could be deployed there if the tension worsens.
South Ossetia has not yet gained international recognition since it drove out Georgian government forces in 1992.
The rising tensions in South Ossetia come as Abkhazia, another breakaway region of Georgia, continues to assert its independence from Tblisi.
Both regions have formal ties with Russia, which contends that Georgia is preparing to take control of the separatist areas by force.
Tblisi accuses Moscow of trying to absorb both regions into Russia, in an attempt to thwart its attempts to join the Nato military alliance.
Russia's foreign minister has called on Georgia not to use violence, according to a report by the Interfax news agency.
"We are seriously concerned by the latest events in South Ossetia," Sergei Lavrov was quoted as saying, during a visit to Turkmenistan.
"We must persuade Tbilisi to sign a legally binding document guaranteeing non-aggression."
On Thursday, an explosion killed a police colonel in South Ossetia and authorities there said Georgia's secret services were behind the killing.
In a separate incident on Thursday, gunmen opened fire on Dmitry Sanakoyev, who is recognised by Georgia as South Ossetia's leader. He escaped the attack unhurt.