Georgian President Mikhail Saakashvili has offered a broad autonomy to the breakaway republic of South Ossetia.
Bringing breakaway regions under control is Mr Saakashvili's priority
Speaking at the Parliamentary Assembly of Council of Europe, he promised constitutional guarantees to South Ossetian self-rule.
Mr Saakashvili said he was ready to extend this offer to another breakaway region, Abkhazia.
He also urged neighbouring Russia to reconsider what he called "its interventionist policy".
Mr Saakashvili came to power last year after leading Georgia's so-called Rose Revolution.
He said Tbilisi's plan for South Ossetia called for "a constitutional guarantee of this autonomy, a status that includes the right for a local government elected freely and directly that would include an executive branch and a parliament".
The Georgian leader then lashed out at Moscow for issuing Russian passports to residents of the breakaway regions, which he said was then used as an excuse to send troops to protect them. He urged Kremlin to work together on the peace settlement in Georgia.
"We are fed up with war, and we want Russia to become our number one partner in the search for peace," he said.
There has been no reaction yet to the Georgian proposals from South Ossetia, but the newly-elected Abkhazian leader, Sergei Bagapsh, dismissed the initiative as a revamp of "similar proposals we received five or six years ago".
He said that Abkhazia would study the proposals seriously, but it was not going to compromise on a single issue - its independence.
In his speech, Mr Saakashvili blamed the Abkhazian leadership for walking out of peace negotiations and said that for this reason it was "no use" to raise the Abkhazian issue right now.
Two days before Mr Saakashvili's Strasbourg speech, the Council of Europe Parliamentary Assembly (Pace) issued a report criticising him for failing to fulfil the obligations Georgia had taken before joining the Council.
"The post-revolutionary situation should not become an alibi for hasty decisions and neglect of democratic and human rights standards," the report said.