Paul Antiss reports: "West will not sit back"

Eight hours of discussions ended on Wednesday night with the American special envoy Richard Holbrooke saying that there had been "no change" in Yugoslav President Slobodan Milosevic's opposition to the Kosovo peace plan.

"We're in a very difficult situation tonight," he said. "There has been no change of the Yugoslav position and needless to say, there has been no change in our position."

Mr Holbrooke said he would return to Washington on Thursday to brief the Clinton Administration.

The US envoy has been leading efforts to persuade President Milosevic to sign the interim deal.

But President Milosevic has restated his opposition to a key part of the plan - the deployment of a multinational peacekeeping force in Kosovo.

Nato participation in such a force - which has already begun to assemble in Macedonia - is regarded by Western leaders as an essential part of the 82-page peace plan which has been drawn up.

Ethnic Albanians not happy either

Ethnic Albanians are also voicing further objections to the scheme. The political wing of the separatist Kosovo Liberation Army has called for it to be rejected when wider peace talks reconvene in France on Monday.

BBC's Orla Guerin: Seems the talks have been a complete failure

Earlier, unconfirmed reports said Mr Holbrooke was offering to ease international sanctions against Yugoslavia if Mr Milosevic backed a peace deal for the province.

The Russian Foreign Minister, Igor Ivanov, is due to travel to the Albanian capital Tirana on Thursday, then onto Belgrade on Friday.

The international negotiators have been hoping that the document would be ready for signing before the peace talks reconvene.

But as the negotiations entered a crucial phase, violence continued to rock Kosovo.

Reports say three bodies have been found in the southern village of Ivaja after a major Serb attack on Tuesday. Most of the houses were still smouldering a day later.

The United Nations is evacuating about 400 ethnic-Albanian refugees trapped in the area.

Nato strikes

Leaders of the ethnic Albanian Kosovo Liberation Army (KLA) had earlier indicated that they would agree to the deal. If they do, the Serbs will come under increased pressure to follow suit or face Nato strikes.

Orla Guerin reports on the current impasse and 'one who loves freedom'

Before the talks Mr Holbrooke warned that Nato and Yugoslavia may be on a "collision course" - a reference to the threat of strikes.

"We are days away from a tragedy of even greater dimensions than what has occurred already,'' he said. "We might be on a collision course between Yugoslavia and the Western authorities including Nato."

Congress debate

Meanwhile, the Clinton administration has failed to persuade Congress not to debate the proposed deployment of United States troops to Kosovo.

With peace negotiations at a critical point Secretary of State Madeleine Albright told a congressional committee that a debate now would complicate American efforts to get the two sides - the Serbs and ethnic Albanians - to sign the accord, and would serve as a green light for them to resume fighting.

But, the Speaker of the House of Representatives said the debate would go ahead on Thursday.

President Clinton has said he is ready to send about 4,000 American soldiers to Kosovo as part of a Nato-led force if a peace settlement can be agreed.

Uncompromising mood

A BBC correspondent in Kosovo, Orla Guerin, says the Serbian mood is uncompromising.

Serbia has issued arrest warrants for eight KLA members. Three are negotiators who represented the ethnic Albanians at last month's peace talks at Rambouillet in France.