Smoke rose over a former Chechen resort on Tuesday as Russian troops backed by helicopter gunships bombarded rebel positions, sending thousands more residents into flight.
Until the latest fighting, Sernovodsk had been a quiet refuge in the 14-month war, attracting thousands of refugees from elsewhere in the separatist republic.
But since the Russian assault began Sunday, heavy casualties have been reported among civilians and fighters.
The operation in Sernovodsk appeared part of a fresh Russian effort to eliminate separatist forces in western Chechnya and along the ill-defined border between the rebel republic and neighboring Ingushetia.
Five Russian soldiers were killed and six were wounded Tuesday during an assault on rebel positions in the town 28 miles west of Grozny, the Interfax news agency said.