"There have been several rounds of talks to work out a mandate for observers and consultations are continuing," Anvar Azimov said, adding the talks were "strained."
Last month Heikki Talvitie, Europe's special representative for the South Caucasus, said the OSCE regional mission in Georgia would be increased from 100 to 300 personnel.
"We are working on mutually acceptable wording, mainly to determine the areas of responsibility and where the additional OSCE military observers will be deployed," Azimov said.
However, The Associated Press cited an anonymous official as saying "The talks have collapsed and there are no further discussions under way."
South Ossetian leader Eduard Kokoity said earlier that any "observers will not be working on the territory of South Ossetia, but on Georgian soil."
