Jonah Hull, Al Jazeera's correspondent in the Georgian town of Gori, described the announcement as an "extraordinary development" and a "virtual surrender" by Georgia.
Reporting from Tiblisi, Alan Fisher, Al Jazeera's correspondent, said: "There's not doubt that the Georgians would like to see an end to hostilities here, but it would appear that they are not going to do it at any cost.
"The problem is that at the moment the Russian holdall the aces - they're in control of South Ossetia, the Georgians have pulled out and the Russians have the military might and the military strength there as well - and can continue to push."
"But at some point this is going to have to be sorted out in a conference room, with people sitting around a table, rather than a battle field with bombs and bullets."
A fourth emergency session of the UN Security Council is currently underway in New York.
John Terrett, Al Jazeera's correspondent at the UN headquarters in the city, said that there was still deadlock among the 15 members of the council who were "particularly split along old Cold War lines between the United States and Russia".
"The Security Council is just starting its fourth meeting in three days. And this meeting is taking the form of open consultations," he said.
"I am being told by a number of ambassadors who I spoke to as they went into this meeting that they don't think there will be anything on paper today but that there will be something soon and it is likely to be a resolution."
He said that the US was currently drafting a separate resolution that was very critical of Russia's decision to go into Georgia.
Bernard Kouchner, the French foreign minister, flew to Tbilisi on an EU mission to mediate an end to the conflict.
Earlier, a joint delegation of the US, European Union and the Organisation of Security and Co-operation in Europe arrived in Georgia in order to mediate a ceasefire.
Gernot Erler, a German deputy foreign minister, said the foreign ministers of Georgia and Russia had held direct talks on Sunday on the escalating conflict.
Erler said Frank-Walter Steinmeier, the German foreign minister, had held telephone talks with his counterparts around the world with the aim of bringing the Georgian and the Russian ministers together.
"There has now been direct contact between the Georgian foreign minister [Eka Tkeshelashvili] and the Russian foreign minister [Sergei Lavrov]," Erler said.
He said amongst those that Steinmeier had spoken to were Tkeshelashvili and Lavrov, the foreign ministers of France, Poland and Finland, as well as Condoleezza Rice, the US secretary of state and Javier Solana, the EU foreign policy chief.
Earlier on Sunday, the leader of the breakaway Georgian region of Abkhazia had decreed a "state of war" in areas close to Georgian-controlled territory, Russia's Interfax news agency said.
The move came after Russian forces took control of Tskhinvali.
"By a decree of Abkhaz President Sergei Bagapsh, a state of war has been introduced in part of the republic's territory," Interfax said, quoting the decree.
The statement affects several territories close to Abkhazia's de facto border with Georgia, and was to go into effect for 10 days starting at midnight from Sunday to Monday.
Russia's armed forces on Sunday denied plans to expand their conflict with Georgia into the Abkhazia region.
"We do not plan to escalate the conflict in this region," Anatoly Nogovitsyn, an army spokesman, said in televised remarks, referring to Abkhazia.
But Georgian officials have accused Russia of escalating the conflict by involving Abkhazia, saying Russia has sent troops and artillery into the region and had begun an operation to storm the Georgian-controlled Kodori gorge in Abkhazia.
"They [the Russian army] have started the operation to storm Kodori gorge," said Shota Utiashvili, an interior ministry spokesman.
Georgia has police stationed in the gorge, protecting a parallel pro-Tbilisi Abkhazian government.
The UN, which has international monitors in the area, has warned of a possible second front opening in the Georgia-Russia conflict.
Separatist authorities in Abkhazia said that they had sent 1,000 troops to the gorge, which Georgian forces control as a strategic foothold in the breakaway Black Sea territory.