Moscow - Russia's FSB secret service said Friday it caught a Georgian spy activating rebel cells in the Russian Caucasus, a claim that aggravates relations to near breaking point between the two former Soviet neighbours.

'A agent of Georgian secret services, a Russian citizen born in Georgia has been apprehended,' an unnamed FSB source told Interfax, adding that this 'confirms the involvement of Georgian secret services in disruptive terrorist activity in the North Caucasus.'

Itar-Tass news agency also quoted an FSB source who specified the agent had been captured 'some time ago' and identified him as a 34- year-old man from Russia's war-torn Chechen republic.

A spokesman for Georgia's Interior Ministry quickly disclaimed Friday, 'Georgian law enforcement agencies have nothing to do with the suspected man.'

'This is pure disinformation aimed at discrediting Georgia,' the spokesman Shota Utyashvili was quoted as saying.

News of the capture further escalates tensions at a time when Georgia has said it is very close to war with Russia over Moscow's support for the breakaway regions of Abkhazia and South Ossetia, which have been occupied by Russian peacekeepers since civil war ended in 1994.

Russia recently increased its peacekeeping troops in the region to counter what it says was Georgia militarization of the border, but Tbilisi turned to the West for support against Russia's 'efforts to annex its territory.'

Russian Foreign Minister Sergei Lavrov called Tbilisi's attempts to rally international support sheer 'propaganda' on Friday.

'In spite of the repeated statements from the leadership of Georgia and their Western allies,' the FSB source told Itar-Tass, the area 'is again being used as a base for terrorists who are active in the North Caucasus.'

The suspected spy's job had been to set up contact between Georgia's intelligence service and an active cell of Islamic rebels in Russia, Interfax reported.

'For this task, the agent many times received financial rewards from Georgia's intelligence services paid in American dollars,' the source told the news agency.

Frayed Georgian-Russian relations have long led to sparks in Abkhazia, the majority of whose citizens hold Russian passports.

But escalating mutual accusations over espionage and troop increases on the borders of the rebel regions have ruptured both country's dialogues with international organizations.

Russia's objections to its post-Soviet neighbour's bid for membership in the North Atlantic Treaty Organization (NATO) sparked the current daily rows.

Efforts at negotiations with Temur Yakobashvili, the Georgian minister for the reintegration of rebel areas, in Moscow on Friday erupted into more fierce words.

The Russian Foreign Ministry accused the Georgian minister had come with no new proposal and only the same stale, hardline positions, ministry official Yuri Popov said.

Yakobashvili in turn reaffirmed an old ultimatum that Russia halt its rapprochement with Georgia's separatist regions or Tbilisi will scupper Russia's WTO aspirations.

'The Georgian side will not change its position because we cannot imagine or talk about any trade regime when against Georgia ... there are attempts to annex our territory,' he added.