Madelaine Albright: "Nato will insist on compliance"

Yugoslavia rejected the statement as incorrect and unacceptable. It described some of Nato's comments as "absurd and cynical".

Meanwhile the United Nations has reported that despite continuing violence, a humanitarian disaster in Kosovo has been averted since October's cease-fire.

US Secretary of State Madeleine Albright made the Nato warning at a joint news conference with the organisation's Secretary-General Javier Solana.

Mrs Albright urged both sides in the Kosovo dispute not to reinforce their positions.

Madelaine Albright: Rebel activity is not an excuse for a new Serb crackdown

She called on the separatist Kosovo Liberation Army (KLA) to "refrain from reprisals and efforts to intimidate".

But she also had a message for Belgrade, saying that the KLA's provocations "do not justify failures by the Serb government to meet its obligations".

The October cease-fire included an agreement by Yugoslav President Slobodan Milosevic to withdraw special police from Kosovo, and Ms Albright demanded that this happen.

"President Milosevic is increasing rather than decreasing the number of special police in Kosovo and he is failing to ensure proper police behaviour.

"He has to understand that Serb actions are being monitored and that NATO will insist on compliance," she added.

Javier Solana: "Nato will not back off"

Mr Solana said Nato would continue to monitor the situation in Kosovo and warned President Milosevic to comply with the terms of the cease-fire.

"He knows that Nato will not back off," he said. "He has to comply."

'Inexact, arbitrary and unacceptable'

The Yugoslav government has rejected the Nato Council statement

The official Belgrade news agency, Tanjug, quoted Deputy Foreign Minister Zlatan Kikic as describing it as being "inexact, arbitrary and unacceptable".

The statement said Mr Kikic "rejected in the most energetic manner the remarks in the message".

Referring to the KLA, he also objected that Nato "tends to measure in the same way the legitimate actions of the state and actions of terrorist groups".

A call by Nato on Belgrade to start talking to the KLA was "absurd and cynical" as dialogue would "only encourage the criminal activity" of the KLA.

Disaster averted

The head of the United Nation refugee agency says despite the continuing violence a humanitarian disaster in Kosovo has now been averted.

Sadako Ogata said the agency estimates around 60,000 refugees, mostly ethnic Albanians, have returned to their homes.