* President George W. Bush urges Russia to reverse course

* Russian troops push deep inside Georgia

* Five central European leaders to go to Georgia

* Sarkozy prepares peace mission to Russia and Georgia

By Matt Robinson

TBILISI, Aug 11 (Reuters) - U.S. President George W. Bush urged Russia on Monday to end its armed conflict with Georgia after Moscow's forces advanced deeper into the territory of its pro-Western neighbour, ignoring Western pleas to halt.

"Russia has invaded a sovereign neighbouring state and threatens a democratic government elected by its people. Such an action is unacceptable in the 21st century," Bush said.

"The Russian government must reverse the course that it appears to be on...," he added, urging Russia to agree to a ceasefire offer by Georgia.

Moscow has snubbed Western pleas for a ceasefire and accused Georgia of not keeping a promise to halt fighting, which erupted on Thursday when Georgia sent forces to retake South Ossetia, a region that threw off Georgian rule in the 1990s and declared itself independent, albeit without international recognition.

It said Tbilisi continued to shell the Russian-held region of South Ossetia where the conflict began last Thursday.

Georgia hosts a key pipeline supplying the West and the fighting has unsettled oil markets. It has alarmed investors in Russia and has raised fears of a wider conflagration in the volatile region bordering Iran, Turkey and Russia.

Russian Prime Minister Vladimir Putin, taking a leading role in the crisis, attacked Washington for helping Georgia fly home troops from Iraq and said the West was mistaking the aggressors for victims in the conflict.

"The Cold War has long ended but the mentality of the Cold War has stayed firmly in the minds of several U.S. diplomats. It is a real shame," Putin said.

Georgia earlier pulled its battered forces back to the capital and appealed for international intervention.

A feeling of uneasiness pervaded Tbilisi as for the first time in four nights, city streets were largely empty, with no evening demonstration by the president's supporters.

"The Georgian army is retreating to defend the capital. The government is urgently seeking international intervention to prevent the fall of Georgia," a Georgian statement said.

Georgian President Mikheil Saakashvili said Russian forces had taken control of Georgia's main east-west route, effectively bisecting the country. He urged Georgians to stay home and not panic.

"We are working with an international community, but all we got so far are just words, statements, moral support, humanitarian aid," Saakashvili said in a televised address. "But we need more -- we want them to stop this barbaric aggressor."

French President Nicolas Sarkozy was expected in Moscow and possibly Georgia on Tuesday for talks on behalf of the European Union, although it was unclear what could be achieved.

Five liberal leaders from central and eastern Europe -- Poland, Ukraine and the three Baltic states -- planned to visit Tbilisi in a show or support for Saakashvili.

PARLIAMENT TO SIT

An emergency session of parliament was called on Tuesday.

"The situation in Georgia is extremely difficult as Russia is using all its resources to occupy the country," Saakashvili said, referring to what he said was the capture of a major road.

Georgia's Prime Minister Lado Gurgenidze told television viewers Russian troops had entered Poti, an oil and cargo shipping centre on the Black Sea. They were also in two other towns in western Georgia -- Senaki and Zugdidi.

Russia's Defence Ministry denied its forces were in Poti. Officials said earlier Russian troops had advanced 40 km (25 miles) from a second separatist enclave, Abkhazia, to capture Senaki, but the ministry said later they had left the town.

Russian officials have said they have no intention of occupying territory beyond the two separatist areas.

A Reuters witness saw Georgian helicopter gunships bombing targets near the South Ossetian capital Tskhinvali, sending dark smoke billowing into the air. A second reporter heard heavy artillery bombardments on the road north of the wrecked town.

CONVOY HEADS FOR TBILISI

A senior Georgian official at one point said Russian troops had seized the Georgian town of Gori, about 40 km (25 miles) from South Ossetia, although Reuters correspondents saw no evidence of Russian forces in the town. One saw a column of Georgian military trucks moving eastwards from Gori towards Tbilisi.

A senior parliamentarian, Nika Rurua, said later Russian forces were positioned outside Gori.

Moscow responded with a counter-attack by its vastly bigger forces that drove Georgian troops out of the devastated South Ossetian capital Tskhinvali on Sunday. Russia says 1,600 people have been killed in the fighting and thousands are homeless but these figures are not independently verifiable.

Saakashvili said earlier he had agreed to a plan proposed by French Foreign Minister Bernard Kouchner under which hostilities would end, a mixed peacekeeping force would be deployed and troops would return to pre-conflict positions.

Women and children wept in the streets of Tskhinvali on Monday as they surveyed the destruction amid continued Georgian shelling. Russian troops distributed water and food from trucks.

One elderly resident told Reuters how she sheltered in a cellar with her 7-year-old grandson during the bombardment.

"My grandson screamed: 'Uncle Putin please help us, help us so that the Georgians don't kill me !'. They were screaming and crying it was terrible, a nightmare," she said.

"Thank God the Russians have come. It is getting better."

Putin accused the West of double standards.

"They (the Americans) of course had to hang Saddam Hussein for destroying several Shiite villages," he said.

"But the current Georgian rulers who in one hour simply wiped 10 Ossetian villages from the face of the earth, the Georgian rulers which used tanks to run over children and the elderly, which threw civilians into cellars and burnt them -- they (Georgian leaders) are players that have to be protected."

Russia said it had lost four military aircraft and 18 soldiers since the fighting started, with another 14 missing in action and 52 wounded.

Russian financial markets slid to their lowest levels in two years early Monday as investors panicked over the conflict.

Stocks later reversed some of their losses on suggestions by President Dmitry Medvedev that the war may be nearing an end.

For special coverage see http://www.reuters.com/news/globalcoverage/georgiaconflict

AlertNet news is provided by