Georgia's interior ministry has said that Russian troops have begun withdrawing from the strategically important town of Gori, about 30km from the breakaway province of South Ossetia.
Russian forces also reportedly began to move out of Poti early on Thursday, after sinking several coast guard vessels at the Black Sea port the previous day.
"The Russians have started to withdraw, the Georgian police and special forces are taking control," Shota Utiashvili, interior ministry spokesman, said.
Russian troops in tanks and armoured personnel carriers entered Gori on Wednesday, despite both sides signing a ceasefire agreement just hours earlier.
However, overnight Russian miitary officials said Gori, which sits on the only significant road between the east and west of the country, would be handed over to Georgian control in the near future.
"For another two days Russian troops will stay in the region to carry out procedures of handing over control functions to Georgian law-enforcement bodies after which they will leave," Major-General Vyacheslav Borisov told Russian news agencies.
"Beginning [Thursday] the city's police will resume their work."
Georgian police on the outskirts of Gori were halting civilian traffic on Thursday morning, and light vehicles carrying Georgian soldiers were parked in the area. The soldiers said they were awaiting further orders.
Al Jazeera's Alan Fisher, reporting from the checkpoint about 20km outside Gori, said that sources inside the town had told him that the Russians were preparing to head back into South Ossetia.
"The Georgians have insisted that when the Russians have departed they be able to put a substantial number of police and soldiers in there to protect the local community," he said.
Borisov also defended his troops, and Russian-backed separatist forces from South Ossetia, from accusations of looting and invited Georgians to return to the town.
"All buildings are in normal shape, the town is supplied with water and electricity," he said.
Gori was battered by Russian bombing before the ceasefire, with Russian officials saying it was targeting a military base near the city.
Witnesses said that South Ossetian fighters, along with with some Russian army personnel, had gone house-to-house in villages near Gori torching homes and looting buildings.
Human Rights Watch said its researchers in South Ossetia had "witnessed terrifying scenes of destruction in four villages that used to be populated exclusively by ethnic Georgians".
But Sergei Lavrov, Russia's foreign minister, said such actions would not be tolerated.
"I said from the very beginning that if any such facts prove true, we will react in the most serious way ... The peaceful population should be protected. We are investigating all these reports and will not allow any such actions," he said.
The ceasefire agreement drafted by France allows Russian forces to take unspecified "security measures", raising the possibility they could try to stay in Georgia proper under the justification of protecting their troops in South Ossetia.