By Gareth Jones
MOSCOW, Jan 18 (Reuters) - A team of Western officials prepared to travel to Russia's war-ravaged North Caucasus region on Tuesday as Moscow's forces pressed their campaign to crush Chechnya's rebels.
The delegation from the Council of Europe, which promotes human rights and democracy, was due to visit Russian-controlled villages in Chechnya as well as the adjacent regions of Dagestan and Ingushetia, temporary home to some 200,000 Chechen refugees.
Russian commanders have stepped up their assault on the Chechen capital Grozny, where up to 40,000 more civilians are still trapped in cold, dank cellars with little or no food.
Their plight is expected to feature high on the agenda of the Council of Europe's mission, which on Monday repeated the call of Western governments for a ceasefire and the start of peace negotiations between Moscow and the Chechen rebels.
Clearly anxious to improve Russia's battered international image, Acting President Vladimir Putin devoted three hours on Monday to the visiting mission, which is led by the head of the Council's parliamentary assembly, Lord Russell-Johnston.
Putin, tipped to become Russia's next president after a March 26 election, appealed for Western understanding and said he would accept an "international presence" in the region to help ensure balanced foreign media coverage of the conflict.
"We understand the concern of the international community over the events in the North Caucasus," Putin told Russell-Johnston at a meeting with other top Russian officials.
"But we want the international community to show an understanding of our position, by relying on facts about the real situation from truthful information and not from propaganda," Putin said in televised comments.
COUNCIL OF EUROPE SAYS PUTIN SHOWS PRAGMATIC APPROACH
Russell-Johnston, a Scottish Liberal Democrat, told reporters Putin had shown flexibility. "(Putin) said he was open to suggestions for a change in his policy from the Council of Europe," he said.
He said he understood Moscow's argument that it has nobody reliable in Chechnya with whom to open talks. Russia says Chechen President Aslan Maskhadov is in the hands of the "bandits and terrorists" it accuses of carrying out bomb attacks and other crimes on Russian territory.
Russell-Johnston rowed back from an earlier threat that Russia might be expelled from the Council of Europe, saying it was too early to speculate what might happen if Moscow persisted with its campaign.
Western criticism has focused on the suffering of innocent civilians, both those trapped in Grozny and elsewhere inside Chechnya and the refugees now living outside the province.
Refugees fleeing Grozny on Monday spoke of a city full of wounded and hungry people too exhausted or frightened to flee.
"They aren't killing any bandits," Zura, 49, told Reuters after reaching Chechnya's border with Ingushetia.
"They're killing old men, women and children. And they keep on bombing -- day and night. Do you know what difficulties we had getting out of the city? We had shells falling around us."
Alena Eskayeva, a Russian from Grozny, said: "I don't know where I'll go. I gave my last earring away to feed my child. I have no idea what I'll do now."
SERGEYEV SAYS CAMPAIGN REACHING FINAL STAGE
Russian officials say the four-month offensive is entering its final phase and have predicted that Grozny, now a devastated shell, will fall to their forces in the near future.
"The situation allows us to speak of completing the final task of the anti-terrorist operation," Defence Minister Igor Sergeyev told reporters on Monday.
But the Chechen rebels have continued to put up fierce resistance both in Grozny and in the mountains of southern Chechnya, their traditional stronghold.
General Vladimir Shamanov told Ekho Moskvy radio Russian forces were making headway in the deep Argun gorge which runs south of Grozny, but at a price.
"Troop operations have been successful. Three (rebel) gangs of up to 40 men in total have been destroyed. But we have taken losses. Five men have been killed and seven wounded," Shamanov said, adding that about 700 rebels remained in the gorge.