A statement released by army headquarters in Belgrade said the troops sent into Kosovo had finished their work against the rebel Kosovo Liberation Army.

The statement said troops started to leave on Sunday night. The number of troops would be reduced to "peacetime" levels when there was an agreement to deploy a UN mission in the province.

Nato called the move "clearly insufficient". Spokesman Jamie Shea said President Milosevic must give clear undertakings of a willingness to comply with all of Nato's conditions before bombing ceased.

US Secretary of State Madeleine Albright called the move a "half measure".

Russia, however, welcomed the statement, calling it a big step in the right direction.

Nigel Margerison: Such large numbers would enable ethnic cleansing to continue despite troops leaving

The announcement will be hard to verify. Nato estimates that the Serbs have 40,000 men under arms in Kosovo. But the Serbian Information Ministry in Pristina said last week that 150,000 Serbs are now under arms in Kosovo, more than three times Nato estimates.

Unofficial estimates are that some 12,000 Serb troops were in the province before a build-up which culminated in the expulsion of hundreds of thousands of Kosovo Albanians and a Nato bombing campaign that began on 24 March.

Mark Laity: "Milosevic trying to increase pressure on Nato"

BBC Defence Correspondent Mark Laity said Yugoslav President Slobodan Milosevic seemed to have timed the move to increase pressure on Nato to stop the bombing while it was on the defensive over last Friday's mistaken mombing of the Chinese embassy in Belgrade.

Clinton apologises for embassy bombing

The move came as President Clinton publicly apologised for Nato's bombing of the embassy.

Madeleine Albright: "A half-measure"

Mr Clinton said that he regretted the bombing, but added that he thought it was important to draw a distinction between an isolated tragic event and deliberate ethnic cleansing.

Bridget Kendall: "Yugoslav TV say the mission against the KLA has been completed"

Earlier, Chinese President Jiang Zemin said the UN Security Council could not discuss any peace plans for Kosovo unless Nato stopped its bombing campaign.

He condemned the Nato action as "absolute gunboat policy".

"With the bombing continuing, it is impossible for the UN Security Council to discuss any plan to solve the problem," President Jiang said in his first comments since the Chinese embassy in Belgrade was hit by Nato missiles on Friday.

His remarks came in a telephone conversation on Monday with Russian President Boris Yeltsin, who has sent his Balkans negotiator Viktor Chernomyrdin to Beijing for urgent talks.

Jiang Zemin: "Absolute gunboat policy"

As a permanent member of the Security Council China has the right of veto and could prevent the progress of a new peace plan for Kosovo thrashed out last week by Russia and the Group of Seven leading industrial nations.

China earlier postponed high level military contacts and other talks with the United States in response to the Nato bombing.

Russia's envoy on Kosovo, Viktor Chernomyrdin, is in Beijing for urgent talks with Chinese leaders.

World Service radio discussion on how the Chinese embassy bombing will affect peace talks

Nato and Russian officials had appeared to be moving closer to a deal, laid out at Bonn last week, involving a peace-keeping force with a Nato element rather than with Nato at its core.

But he may be concerned that Chinese anger over the embassy bombing may impede his efforts.

Mike Williams in Belgrade: Nato returns to many of the same targets

Serbian media reported just two Nato attacks on Sunday night, both on the southern city of Nis.

One blast was heard at the airport, another in the centre of the city and there were unconfirmed reports of a hit on the post office, a hub for telephone links in the region.

(Click here to see a map of last night's Nato strikes)

With low rain clouds across Yugoslavia, for the first time since bombings began, the people of the capital did not hear the sound of air raid sirens and the anti-aircraft guns were silent.

The Beijing protests appear to have been initially well organised

Nato said it had also attacked targets in Kosovo, including two tanks, 10 armoured personnel carriers and a command post.

Protests have continued for a third day outside the US Embassy in Beijing, where Monday's newspapers carried the first pictures of the bombing victims.

Many protesters have called for the downgrading of relations with the US or for them to be broken off completely.

The BBC's Paul Anstiss: China accused Nato of trying to cover up its mistake

On Sunday, angry crowds besieged the US Embassy, demanding revenge for the deaths of three Chinese citizens at the Belgrade embassy.

The British Embassy in Beijing has also come under attack, with thousands of angry students pelting the buillding with stones and paint.

'Held hostage'

US Ambassador in Beijing James Sasser: "Unable to leave here now for almost 50 hours"

The US ambassador in Beijing, James Sasser, said embassy staff had been hostages in the building since the demonstrations started.

The protesters' anger has also turned on foreign news journalists trying to report the events.

A BBC crew in Beijing was beaten and pelted with stones, accused of insulting China.

The BBC's Jill McGivering: "The unleashed anger could be hard to contain"

The US says an intelligence mistake, caused by faulty information, led to the bombing of the Chinese embassy.

Yugoslavia has begun legal action against 10 Nato countries at the International Court of Justice in The Hague.

Yugoslavia contends that the alliance has acted without UN Security Council authorisation, and that it has failed to protect civilians as stipulated in the Geneva Convention.

Nato spokesman Jamie Shea called it a "frivolous" attempt to deflect responsibility for the Serbs' ethnic cleansing of Kosovo.

• Clinton apologises for embassy bombing
• Refugees refuse to move to Albania
• Nato opens courtroom defence
• Yeltsin keeps his aides guessing
• China moves to control protests

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