(Adds Saakashvili comment)

By Christian Lowe

MOSCOW, June 27 (Reuters) - Russia and Georgia on Friday denied a newspaper report that they were discussing a plan to resolve their conflict over the breakaway Abkhazia region by splitting it into two spheres of influence.

Abkhazia is recognised as part of Georgia but it is run by separatists with support from Moscow. Friction between the ex-Soviet neighbours over the region has alarmed Western states worried about a conflagration near a vital oil export route.

Russia's Kommersant newspaper said on Friday Georgia was offering to accept the separatists' de facto control and the presence of Russian peacekeepers in the northern part of Abkhazia, including the capital, Sukhumi.

In exchange, Tbilisi wanted Russian peacekeepers to withdraw from the Gali and Ochamchira districts in the south of Abkhazia and for ethnic Georgians -- who used to be in a majority in the two districts -- to be allowed to return, the newspaper said.

Russian Foreign Minister Sergei Lavrov later said it was "absolutely untrue" that discussions on such a proposal were underway, Russian news agencies reported.

In Tbilisi, Georgian President Mikheil Saakashvili said the newspaper report was untrue.

"We are not going to give up anything to anyone," he said at a news briefing. "We have peaceful plans which envisage creating a free economic zone in Gali and Ochamchira and are at the initial stage."

Saakashvili has proposed a peace deal under which Tbilisi would retain sovereignty over the region but the Abkhaz would enjoy a large degree of autonomy.

WINTER OLYMPIC THREAT

Since the start of this year, Russia has established semi-official links to the separatists and sent in extra troops.

Aspiring NATO member Georgia accused Russia of trying to annex the region sandwiched between the Black Sea and the Caucasus mountains.

Tbilisi's Western allies warned Moscow it was stoking tensions in a part of the world that is emerging as a major transit route for oil exports.

A BP-led <BP.L> pipeline pumps about 1 million barrels a day of Caspian Sea crude through Georgia to the Turkish Mediterranean port of Ceyhan.

Georgian forces were driven out of Abkhazia in a separatist war in the early 1990s. Western diplomats say the stand-off has become so tense that for a time this year there was a real danger of a resumption of hostilities.

In one incident, the United Nations said a Russian air force jet shot down an unmanned Georgian spy plane over Abkhazia, though Moscow denied involvement.

Some observers say if no solution is found, the conflict could jeopardise the 2014 Winter Olympics which Russia is hosting just a few kilometres from the border with Abkhazia. (Additional reporting by Margarita Antidze in Tbilisi; writing by Christian Lowe; editing by Stephen Weeks)

AlertNet news is provided by