Adem Demaci (in Albanian) speaking on Serb B-92 radio

Adem Demaci said it would accept a deal that kept the province inside Yugoslavia, as the group realised its ultimate goal of independence for Kosovo could only be reached gradually.

The BBC's Jackie Rowland in Belgrade says Mr Demaci's statement indicates that the rebels could be moving towards accepting United States proposals on self-rule for Kosovo.

"It would be acceptable for us to have such a transitional period as a third Yugoslav republic, and with the Kosovo Albanians having the right to determine their own future within three years," he said on the independent Serbian radio station, B-92, monitored by the BBC.

Jackie Rowland in Belgrade: Shift towards US proposals

He said the KLA would agree to Kosovo temporarily becoming a third Yugoslav federal republic, alongside Serbia and Montenegro if such a deal were guaranteed by the international community and followed within three years by a referendum on independence.

Ethnic Albanian commentators in Kosovo say this is the first time Mr Demaci has publicly expressed support for the idea of the territory becoming a Yugoslav republic.

No speed up

He added that he did not think the KLA's change in position would speed up peace talks with Serbia, which has already criticised similar proposals from American diplomats.

Adem Demaci is suggesting a more pragmatic KLA line

Belgrade was "trying to force something down our throat that not even a dog with a greased gullet would touch," he said.

Mr Demaci said the ethnic Albanians were still rejecting the latest version of US envoy Christopher Hill's peace plan because it gave Kosovo considerable autonomy but did not include a referendum on independence.

Clashes that began in February following a Serb crackdown on ethnic Albanian separatists in Kosovo have claimed hundreds of lives and forced more than 300,000 people from their homes.