Yugoslavia's Defence Minister Pavle Bulatovic has died in a hail of bullets while sitting in a Belgrade restaurant.

Mr Bulatovic, 51, was in the restaurant of Rad football club when gunmen using automatic weapons began firing through windows.

Police said the owner of the restaurant, Mirko Knezevic, and a banker, Vuk Obradovic, were also shot and slightly wounded.

The shooting occurred less than a month after Serbia's most notorious warlord, Zeljko Raznatovic, known as Arkan, was assassinated in a Belgrade hotel.

Mr Bulatovic was a senior member of the Socialist People's Party, which is in opposition to the Western-leaning leadership of Montenegro.

This has led to theories that he was the victim of a grudge killing.

The restaurant is a known meeting place for Montenegrins loyal to President Milosevic and Mr Bulatovic - who took the defence portfolio in 1994 - was often seen there.

Mr Milosevic sent condolences to Mr Bulatovic's family. In a statement, the Yugoslav government also sent its sympathies and "expresses its gratitude and respect to the contribution Pavle Bulatovic brought to the defence, the affirmation and the development of the Federal Republic of Yugoslavia".

An emergency session of the Yugoslav government was held to discuss the shooting.

Yugoslav deputy information minister Miodrag Popovic told the BBC that the nature of the killing pointed to a terrorist attack.

He said that it could be the work of the Kosovo Liberation Army.

As defence minister, Bulatovic played a key role in the crackdown on ethnic Albanians in Kosovo.

One opposition figure said the killing of such a high-ranking government official was a sign of a society where no citizen felt safe.