The Serbian authorities said Zvonko Bojanic was abducted from his home and killed by his kidnappers on Thursday night.

Mr Bojanic was the deputy mayor of Kosovo Polje, a town with a large Serb minority.

His badly-beaten body was found dumped by a roadside.

Serbian state television said Mr Bojanic was abducted in full view of members of his family, two of whom were tied up with chains.

It said the kidnappers wore uniforms carrying the insignia of the separatist Kosovo Liberation Army (KLA).

William Walker: Heinous crime

US diplomat and head of the Kosovo Monitoring Mission, William Walker, said he deplored the latest "heinous crime" and condemned all terrorist acts.

He said: "I strongly condemn this and all other terrorist acts, I am certain the international community I represent will similarly condemn it.

"The KLA leadership has been informed of my personal abhorrence and unacceptability of criminal acts such as this."

Worried US officials issued a statement urging calm.

"While there will be a great temptation to seek retribution, that would mean surrendering to those who committed this terrible act," said the statement by Richard Miles, chief mission of the US Embassy in Belgrade, and Shaun Byrnes, chief of the US Kosovo diplomatic observer mission.

However, KLA representative Adem Demaci denied that the rebels were involved in the killing and suggested it may have been staged by Serbian secret police.

"Our targets are exclusively police and military of the Serbian regime," he said.

This latest killing is the second Serb murder this week, after six Serb youths died when masked gunmen sprayed bullets around a bar in the western Kosovo town of Pec on Monday.

The Pec shootings prompted outrage among Serbs who urged Belgrade to respond.

Serbian President Slobodan Milosevic, whose forces drove more than a quarter of a million people from their homes in a crackdown in Kosovo earlier this year, pledged to wipe out "terrorism".

The Serb official's death also came just hours after Kosovo's ethnic Albanian rebels vowed revenge for the killing of 36 guerrilla fighters in a border clash Monday.

The ethnic Albanian-run Council for the Defence of Human Rights and Freedoms said the latest deaths had brought the number of dead it been able to identify to 1,865.