Clashes between Serbian security forces and ethnic Albanian fighters was reported on Saturday in the northern region of Podujevo.

William Walker: hopes dashed

The onset of more fighting is a major blow to the head of international monitors in the province, William Walker.

Mr Walker, who leads a mission in Kosovo by the Organisation for Security and Cooperation in Europe, had met Serbian and ethnic Albanian commanders on Friday. He urged them to reinstate a ceasefire agreed two months ago which ended on Christmas Eve.

Nato has threatened air strikes on Belgrade if the terms of the truce are breached.

BBC Correspondent Jackie Rowland: International officials disappointed by fresh fighting

But international monitors accuse both Serbs and the Kosovo Liberation Army (KLA) of increasing conflict in the area.

The latest violence was sparked by the killing of a local Serb civilian in the village of Obrandza.

The main ethnic Albanian political party - the League for a Democratic Kosovo - said Serbian police in armoured vehicles attacked the village.

Serb police said ethnic Albanian gunmen were responsible for the death of the Serb, Milovan Rodojevic, killed as he was leaving his front door. Mr Rodojevic was reported to be an elderly man, and a member of the only Serb family left in Obrandza.

Hopes of returning to a peaceful standoff had been raised after Serb forces withdrew two days after launching a large offensive on the rebel-controlled village of Lapastica.

Serb soldiers on alert

International monitors said some Serb forces had pulled back from the area but were still confronting KLA fighters.

The violence highlights the limitations of the unarmed ceasefire monitors, left vulnerable to attack or kidnap.

Nato is preparing a rescue force from across the border in Macedonia, but any intervention in Kosovo to pull out the monitors would be fraught with difficulties.