Serbian and ethnic Albanian delegates have returned home from the Rambouillet peace conference, after an extension of the deadline failed to bring the two sides to full agreement on a peace plan put foward by the international Contact Group.

Serbian President Milan Milutinovic said that Western mediators' optimistic assessment of the talks was "a camouflage for failure".

The talks ended on Tuesday with the announcement of an interim peace agreement which would give Kosovo substantial autonomy.

But neither side signed the accord, and there was no agreement on military implementation of the plan - to be backed up by a Nato-led peacekeeping force.

The Serbs said they were prepared to discuss the composition of an "international presence", but rejected a foreign military presence on their territory.

"Troops are troops. The main problem is the troops, not the composition of the troops," President Milutinovic said.

'No agreement'

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The Albanian delegation leader and head of the Kosovo Liberation Army (KLA), Hashim Thaqi, was dismissive of the accord.

"Today in Rambouillet I, Hashim Thaqi, did not sign any kind of agreement," he said in a message broadcast on Albanian television.

Albanian negotiator Veton Surroy: "Significant progress"

"I invite the people of Kosovo for unity and resistance, to strengthen the fight of the Kosovo Liberation Army."

He warned Albanians: "Do not expect much on 15 March" - the date when the two sides are due to reconvene.

More fighting

In Kosovo itself, skirmishes have continued between the two sides.

Bridget Kendall in Rambouillet: 17 days haven't got them very far

A BBC correspondent there says the failure to reach a settlement at Rambouillet has been met with silent resignation from ordinary people.

Westen leaders took a consistently more optimistic line.

Belgrade is still refusing to accept Nato peacekeeping troops

Surveying events from Washington, President Bill Clinton said the partial agreement was "a significant step forward" and urged both sides to sign it next month.

"I believe that the Kosovar Albanian people will strongly support what their negotiators have done, because the agreement represents the opportunity for a better life after years of repression and fear," the president said.

"The Serbs should be prepared to return to the negotiations on 15 March with a commitment to sign the full agreement," he added, noting that Nato remained poised to use military force if necessary.

US Secretary of State Madeleine Albright said the ethnic Albanians had agreed in principle to sign the political accord in two weeks, but the Serbs had not agreed to the political deal, and "had not engaged at all" on the deployment of Nato troops.

'Whatever means necessary'

Nato Secretary-General Javier Solana warned that the Atlantic alliance remained "ready to use whatever means are necessary to bring about a peaceful solution ... and prevent further human suffering".

However, Contact Group member Russia said its opposition to Nato involvement in Yugoslavia had prevailed.

UK Foreign Secretary Robin Cook: "We've done a lot"

Others involved in the talks remained upbeat. UK Foreign Secretary Robin Cook, who co-chaired the talks, insisted substantial progress had been made, with provisions for both Kosovo's self-government and the protection of the ethnic Serb population living in the province.

"We have done a lot here even if we have not done enough. We will use the next three weeks to convince the Serbs and to convince the Albanians that the agreement is a good bargain for both sides," Mr Cook said.

Neighbouring Albania welcomed the agreement. Foreign Minister Paskal Milo has said the political accord was "not the best and what all Albanians would wish for, but is a very good basis to proceed."