The Foreign Office is calling for an immediate ceasefire between Russia and Georgia as Russian troops enter the country to support separatist forces.
"We are urging an immediate ceasefire in the fighting in South Ossetia and for a resumption in direct dialogue between all parties," a spokesman told politics.co.uk
The White House has also urged an immediate end to hostilities.
Liberal Democrat foreign secretary Edward Davey said: "We need a ceasefire and urgent negotiations to stop the military action escalating.
"There is now real danger of an all-out conflict between Russian and Georgian troops.
"There is also the risk of Abkhazia raising the stakes by cutting vital hydro-electricity supplies to Georgia," he continued.
"The UN must put pressure on Russia to pull back from the brink. If the Russians can show restraint, they will surely be well placed to offer negotiations."
The conflict between Georgia and separatists South Ossetia is on the verge of escalating into war after Russia sent troops into the breakaway region.
Georgian sources are claiming their forces have shot down two Russian planes, although many reports from the region cannot be independently verified.
Other reports suggest ten Russian 'peacekeepers' have been killed.
Moscow's three principal news agencies reported an army convoy had crossed into South Ossetia from Russia ear;ier today.
The development prompted a senior official on Georgia's national security council to tell the Reuters news agency the two countries were "very close" to war.
Russian jets have also attacked a Georgian airbase outside its capital.
Overnight Tbilisi launched a military offensive against South Ossetia, shelling capital Tskhinvali, surrounding it with tanks and conducting jet air strikes.
Georgia's pro-western president Mikhail Saakasvili wants to bring the breakaway region's 80,000 residents back under central control.
But the Kremlin said the deaths of its "countrymen" would be punished.
Earlier Russia's foreign ministry accused Georgia of a "dirty war" according to the RIA Novosti news agency
"Bloodshed in South Ossetia will be on their conscience. We will protect our peacekeepers and citizens of the Russian Federation," a statement said.
Nato, the European Union, the US, the UK, the United Nations and the Organisation for Security and Cooperation in Europe have all called on the fighting to be stopped.
Georgia is currently observing a three-hour ceasefire that set up a humanitarian corridor into South Ossetia.