The move was announced as the second round of negotiations on the future of Kosovo began in Paris amid continuing defiance from Serbia.

The ethnic Albanians made the announcement in a letter to the co-chairmen of the talks, UK Foreign Secretary Robin Cook and his French counterpart Hubert Védrine.

Jim Fish reports: "Self rule but not independence"

The deal gives Kosovo extensive autonomy for a three-year period - but not independence. It also requires the Kosovo Liberation Army to lay down its arms.

President Clinton - speaking after the announcement - said that if the Serbs refused to sign the deal, Nato would have little option but to begin air strikes.

Mr Clinton said Nato would launch strikes against Yugoslav President Slobodan Milosevic "if he shows intransigence and aggression".

"I would encourage Mr Milosevic to agree to the terms as well [as the ethnic Albanians] so that we can avoid further conflict and bloodshed," he said.

Mr Cook and Mr Vedrine welcomed the letter. Mr Cook said the international community would now be able to increase pressure on the Serbs to accept the deal.

Serbs: No Nato force

But the Serbian delegation responded to the announcement by saying that there was not yet any agreement to sign.

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The Serbian President, Milan Milutinovic, said work was still continuing on a political settlement for self-government in Kosovo.

He reiterated that the deployment of a Nato-led force in Kosovo was out of the question.

The international community, which is insisting on a Nato presence to oversee the deal, has proposed stationing 28,000 peacekeepers in the province.

Fighting goes on

There was more fighting in the north of Kosovo on Monday. International monitors said they saw several houses on fire. There have also been further instances of intimidation of the unarmed ceasefire monitors.

The UK foreign secretary said this harassment was becoming "increasingly bold and blunt".

"Both sides are now ceasing to respect the authority and independence of the Kosovo verification mission," Mr Cook told BBC Radio 4's Today programme.

"That is why, in the peace proposals we have put before both sides at Rambouillet and are taking again with us to Paris, we stressed very strongly the need for a significant international presence to guarantee the ceasefire."

Serbs warn against Nato troops

Just hours before the talks began in Paris, Serbia threatened that any deployment of Nato-led peacekeeping troops to Kosovo would be considered an act of aggression.

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Chief Serbian negotiator and Deputy Prime Minister, Ratko Markovic, said Serbia would never agree to give Kosovo away.

"If Nato entered Serbia without invitation it would be met as an aggressor, as an enemy," he warned.

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Mr Markovic said his delegation was prepared to sign a deal giving Kosovo wide political autonomy but he rejected the outright independence for which the ethnic Albanians are fighting.

"Serbia can lose Kosovo only if it is defeated by others who are stronger, and not through negotiations," he said.

'Last chance'

The first round of negotiations, at Rambouillet on the outskirts of Paris, lasted for 17 days. But the warring sides reached only conditional agreement on autonomy for Kosovo.

Nato Secretary-General, Javier Solana, has warned that the current talks are President Milosevic's "last opportunity" to avoid military action.