Medvedev, centre, met the security council in Sochi before signing the decree [AFP]

"I have signed decrees on the recognition of the independence of South Ossetia and Abkhazia," Medvedev said in a pre-recorded address broadcast on national television.

"This is not an easy choice but this is the only chance to save people's lives," he said a day after Russia's Kremlin-controlled parliament voted unanimously to support the diplomatic recognition.

Medvedev's announcement came a day after Russia's parliament passed resolutions calling for the recognition of South Ossetia and Abkhazia as independent states.

Medvedev's declaration comes as Russian forces remain in Georgia after a war, staking out positions beyond the de-facto borders of the separatist regions.

Abkhazia and South Ossetia have effectively ruled themselves following wars with Georgia in the 1990s.

Georgian 'genocide'

Russia's military presence seems likely to further weaken Georgia, a Western ally in the Caucasus region, a major transit corridor for energy supplies to Europe and a strategic crossroads close to the Middle East, Iran, Afghanistan, Russia and energy-rich Central Asia.

Russian tanks and troops drove deep into the US ally's territory in a five-day war this month that Moscow saw as a justified response to a military threat in its backyard and the West viewed as a repeat of Soviet-style intervention in its vassal states.

Medvedev said Mikhail Saakashvili, the Georgian president, had forced Russia's hand by launching an August 7 attack to seize control of South Ossetia by force.

"Saakashvili chose genocide to fulfill his political plans,'' Medvedev said.

"Georgia chose the least human way to achieve its goal - to absorb South Ossetia by eliminating a whole nation.''

On the heels of Russia's first post-Soviet invasion of a foreign country, recognition was another stark demonstration of the Kremlin's determination to hold sway in lands where its clout is jeopardized by Nato's expansion and growing Western influence.

After Russia's parliament urged the move on Monday, the US state department
said recognition of the two areas would be "unacceptable" and George W. Bush, the US president, urged the Kremlin against it.

Reaction from Georgia

Giga Bokeria, Georgia's deputy foreign minister described Medvedev's recognition of South Ossetia and Abkhazia as independent states as an "annexation" by Moscow of Georgian territory.

"This is an unconcealed annexation of these territories, which are a part of Georgia," Bokeria said.

Alexander Lomaia, the Georgian national security council secretary, said: "This decision has no legal force. Russia will face harsh political consequences from this."

France, which had brokered a ceasefire agreement to end the fighting between Russia and Georgia, said it regretted the Kremlin's move.

"We consider this is a regrettable decision and I recall our attachment to the territorial integrity of Georgia," Eric Chevallier, a French foreign ministry spokesman said.

Russian stocks fell on the decision, as traders worried that it would increase international tension.

The benchmark RTS index, which had already dropped earlier in the session on weak oil prices, extended its losses and was down nearly six per cent.

David Aserkoff, an equity strategist for Renaissance capital, said: "This is a symptom of the poor sentiment toward Russia on the international public level, on the domestic political level, and oil prices are at a new low in recent days and weeks.

"It is very hard to see any positives for the Russian market at the current time."

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