Russian-backed forces were accused of burning and looting villages in Georgia today as the United States and humanitarian groups warned that the conflict in the Caucasus could be unleashing ethnic violence between Georgians and natives of South Ossetia, the breakaway province.

Moscow and the Georgians have been trading charges of atrocities and ethnic cleansing since the outbreak of the fighting last Friday but alarm grew today after witnesses reported brutality, in particular by South Ossetian militia.

Even a senior South Ossetian commander acknowledged that looting had been taking place, saying "war is war'. The Russian Government continued to accuse President Mikhail Saakashvili of unleashing genocide and killing 2,000 civilians, but it promised to punish any troops found looting.

Human rights observers on the ground in South Ossetia told the Times that the Russians were wildly exaggerating the claims of mass killings by Georgian forces.

"The use of terms such as genocide is absolutely irresponsible," said Anna Neistat of Human Rights Watch, after she had visited the main hospital in Tskhinvali, the South Ossetian capital.

The hospital reported that 44 people - mainly civilians - had been killed in the city during the Georgian offensive there, she told The Times by telephone.

The result was to fan hatred for Georgians among neighbours who had previously been friendly to them, she said.

The Russians were out-done in their allegations by President Saakashvili, whose claims have become more extreme by the day.

"Russian tanks are going through villages inhabited by the Georgian population and throwing people out of the houses, pushing people into concentration camps that they are setting up in those villages and separating men and women," he told US television.

Witnesses said hundreds of South Ossetian militia, some with Russian army personnel, went earlier this week house-to-house in villages near Gori, the Georgian city nearest the breakaway province.

They set dozens of houses ablaze and looted buildings.

The body of a man lay in a street in the village of Dzardzanis and nearby the body of a bearded man could be seen crushed under an overturned mini-van, a French journalist reported.

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