Mediators at the talks at Rambouillet in France cite "substantial progress" towards a political settlement for the province.

But they blame Serbian delegates for blocking progress on the main sticking point - the deployment of a Nato force to implement the deal.

BBC Correspondent Jim Fish: US reluctant to extend deadline

The limited progress came amid reports of new fighting in Kosovo. Hundreds of ethnic Albanian civilians were forced by artillery fire to flee the village of Studencane, south of the provincial capital, Pristina; there was also fighting near the town of Podujevo in the north of the Serbian province.

Robin Cook: Close to agreement on political settlement

The international Contact Group on Yugoslavia had given Serbs and ethnic Albanians until midday on Saturday to come to an agreement, or face Nato air attacks.

But the French Foreign Minister, Hubert Vedrine, and the British Foreign Secretary Robin Cook said enough progress had been made on the political terms of a deal to justify an extension to 1400 GMT on Tuesday.

Mr Cook and Mr Vedrine said the two sides themselves wanted more time.

Serbs blamed

Madeleine Albright: Evasion and delay by Serbs

The US Secretary of State Madeleine Albright made it clear who she thought was holding up the deal.

"The Kosovar Albanians have negotiated with discipline of purpose," she said.

"On the contrary, Belgrade has taken every opportunity for evasion and delay."

Mr Cook agreed that "it is still the Yugoslav delegation which refuses to make concessions," on the question of a peacekeeping force.

Mrs Albright said the Contact Group had extended the deadline reluctantly.

Nothing short of full compliance with the peace blueprint - including Serbian acceptance of the Nato peacekeepers - would be accepted, she said.

Observers at the talks say the US team only approved the extension under pressure from Russia and France, which are reluctant to resort to air attacks.

Partial breakthrough

The extension of the deadline followed a last-minute breakthrough on plans to grant Kosovo a degree of autonomy.

A Serbian source said Serbian President Milan Milutinovic and Yugoslav Deputy Prime Minister Nikola Sainovic had told Contact Group foreign ministers that Belgrade could agree to the political part of the proposed accord, subject to some minor changes.

Diplomats also said the ethnic Albanian delegation had conditionally approved the internationally brokered peace plan.

"The Kosovo Albanians have said 'yes' in principle. They sought two minor changes and we are going to try to accommodate them," one diplomat said.