That's according to French president Nikolas Sarkozy who's been mediating the agreement. Sarkozy announced this at a joint news conference with Saakashvili in Tbilisi.
According to the plan, both Georgian and Russian troops will retreat to their previous positions before the violence began.
Both sides also agree to the non use of force.
Sarkozy said the European Union would act as a guarantor in the process of regulating the conflict.
Peace plan devised
Sarkozy had been in Moscow earlier and hammered out the deal with Russian president Dmitry Medvedev. It called for the sides to sign up to the following principles:
1) Non-use of force.
2) Stop all military action.
3) Free access to humanitarian aid.
4) Georgian troops return to their previous positions before the conflict.
5) Russian troops return to the lines they held before the start of the military operation. Before an international solution is worked out Russian peacekeepers are taking up an additional security role.
6) The start of an international discussion over the future status of South Ossetia and Abkhazia.
To watch the press conference of the Russian and French presidents please follow the link.
The French President showed his understanding of Russia’s position. He added that France and Europe sought peace, and all the efforts now are aimed at achieving it.
“It’s quite normal that Russia wants to defend its interests, as well as the interests of Russians both in and outside Russia. It is also normal that we, the international community, want to guarantee the integrity, sovereignty and independence of Georgia. France has delivered a document to you and, I hope, we will be working on that basis,” he said.
Shortly after the attacks began last week, the country urged all sides to show restraint and avoid any escalation, as well as a resumption of direct dialogue between them.
France also proposed a ceasefire plan, which was rejected by Russia. Moscow insisted that before the ceasefire could take place, Georgia must withdraw its troops from the conflict area.
The two Presidents have also had several phone conversations in the past few days on the situation in South Ossetia and Georgia.
August 13 day of mourning in Russia
At least 1,600 people are believed to have been killed during five days of violence.
President Medvedev has issued a decree declaring August 13 a day of mourning in Russia for the humanitarian disaster in South Ossetia.
Flags will be flown at half-mast throughout the country.
The Russian Government has promised some $US 40 million to help re-build the city.
It is estimated that more than 30,000 Ossetians have fled the fighting to cross the border to Russia. Funerals are being held in North Ossetia.