A fuel train hit a mine and exploded near the Georgian city of Gori as Russia faced renewed European Union pressure to make a complete withdrawal from Georgia.
The Georgian Interior Ministry said the rail track used by the train had been mined and a huge pall of black smoke could be seen across the Gori region after the explosion.
The blast came after five days of conflict between Russia and the Georgian army.
Russia withdrew tanks, artillery and hundreds of troops from the heart of Georgia on Friday, saying it had fulfilled all obligations under a French-brokered peace agreement.
But Russian troops still control access to the western port of Poti and have established a checkpoint just north of Gori.
Acting as chair of the European Union, French President Nicolas Sarkozy telephoned his Russian counterpart Dmitry Medvedev and asked him to withdraw his forces from a key road linking Poti to Senaki in western Georgia.
A statement from Sarkozy's office said Mr Sarkozy and Mr Medvedev agreed on the need for an "international mechanism" in the area south of South Ossetia.
The Kremlin said it was ready to cooperate with the Organisation for Security and Cooperation in Europe (OSCE) to monitor a buffer zone near South Ossetia, where fighting broke out this month.
But it added that international monitors would not replace Russian troops as a statement from the French presidency asserted.
"During the telephone conversation between the Russian and French presidents, there was no discussion about replacing Russian peacekeeping troops by an OSCE mission in the buffer zone," said a Kremlin spokesman.
The west sees the presence of OSCE monitors as critical to ensuring the success of the ceasefire.
The vague six-point peace plan has been interpreted differently by Russia and the west, with Russian claiming it has the right to leave peacekeepers deep inside Georgia.
France, Britain, the United States, NATO and other western powers have demanded Russia pull back further but this has been rejected by Russia.
Russian troops poured into Georgia on August 8 to repel a Georgian attempt to regain control of the breakaway region of South Ossetia, which is backed by Moscow.
Russia's two houses of parliament meet on Monday to discuss appeals from South Ossetia and Abkhazia for recognition of their independence.
Aid arrives by sea
A US warship has arrived in the Georgian port of Batumi carrying the first delivery of aid supplies by sea.
The UN's refugee agency UNHCR reported this week that, according to Russian estimates, more than 30,000 people from South Ossetia had fled to North Ossetia. Another 128,000 were estimated to have been displaced within Georgia.
International aid agencies are working on the ground and the US has already delivered some aid by military cargo plane.
The destroyer USS McFaul is reported to be carrying supplies such as blankets, hygiene kits and baby food.
Two more US ships are due to dock later this week.
