Bridget Kendall: "Time is running out"

Mr Milosevic was speaking after a chief American mediator in the Kosovo peace talks flew to Belgrade to urge him to accept a settlement in the war-torn province.

United States envoy Christopher Hill is thought to have told the president to agree to the internationally brokered deal or face a Nato bombardment.

US Secretary of State Madeleine Albright earlier telephoned Mr Milosevic to brief him on the talks between Serbs and ethnic Albanians being held at a French chateau.

The two sides have until noon on Saturday to agree to a plan aimed at ending a year of bloodshed in Kosovo which has cost around 2,000 lives and driven hundreds of thousands from their homes.

Mr Hill: Expected to talk tough

US State Department spokesman James Rubin said the Serb side remained the obstacle to progress, with the ethnic Albanian side now ready to sign an agreement.

He said Mrs Albright's conversation with the Yugoslav president was "businesslike".

The peace deal gives the province substantial autonomy for an interim three-year period while remaining a part of Yugoslavia.

But the Serb side has repeatedly refused to allow foreign troops to police the agreement.

'We can police the terrorists'

The Serbs were counting on Russia to back them, but the Associated Press news agency says it is now clear Moscow is willing to go along with a Nato deployment in the province as part of the agreement.

However, Russia still opposes Nato airstrikes against Yugoslavia in the event the peace talks fail.

At the begining of the week Russian Foreign Minister Igor Ivanov said he believed the two sides would reach a deal before the deadline.

But at the same time, the Serbian President Milan Milutinovic made clear that Belgrade would not accept a foreign peacekeeping force in Kosovo where 90% of the population is ethnic Albanian.

"If the agreement that is reached is good, why impose something people accept, unless [it is] to chase the terrorists, but we can chase the terrorists," he said in reference to ethnic Albanian guerrilla fighters.