The incursion - first reported by international monitors and later corroborated by the Albanian Government - followed several days of heavy border fighting between Serbian soldiers and the Kosovo Liberation Army.

The federal Yugoslav Government says the KLA uses villages just inside Albania's territory as bases for cross-border attacks.

The Albanian Government confirmed that Serb troops have withdrawn from its territory.

But the US warned the Serbian authorities not to widen the conflict, saying this would cause "serious consequences".

The border incursion took place as the American Secretary of State, Madeleine Albright and the Russian Foreign Minister, Igor Ivanov held what they described as "useful" talk.

However they reached no agreement on Russian participation in an international force for Kosovo.

Nato, meanwhile, is boosting its forces in the region - the alliance's Supreme Commander in Europe revealed he had asked for 300 more planes from the US, as well as extra aircraft from other member nations.

(Click here for map of latest strikes)

The BBC's David Loyn: "Every day, more young men come back to fight the Serbs"

The Organisation for Security and Co-operation in Europe first reported the attack in the Tropoje district.

Spokesman Andrea Angeli said the Kamenica border post was attacked and nearby houses were burned.

But a Yugoslav foreign ministry spokesman denied it had entered Albania, calling the allegation outrageous.

Air armada requested

Nato's Supreme Commander in Europe, General Wesley Clark, said he had no independent confirmation of the reported attack.

He told the daily Nato news briefing, in Brussels, that he had requested more planes from members nations.

General Clark said he had asked for 300 aircraft from the US alone and more from other Nato member nations.

If the Pentagon agreees to the request for 300 US planes it will take the number of Nato aircraft operating in the Balkans to 1,000.

The general said that despite nearly 6,000 sorties flown in Operation Allied Force, there were 23 battalion-sized units of Serb forces still inside Kosovo.

Oslo meeting

The Serb incursion came after reports of clashes on Sunday and Monday on Albania's north-eastern border between Serb forces and members of the KLA.

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US Secretary of State Madeleine Albright learned of the attack while in Oslo to meet the Russian Foreign Minister Igor Ivanov.

She said: "The US has made it clear that a widening of the conflict by the Serbs would have serious consequences."

She was meeting Mr Ivanov to try to reconcile differences between Russia and the US over Nato's bombing of Yugoslavia.

Russia has sharply criticised the air attacks on its traditional ally, and President Boris Yeltsin has warned that Nato's actions could lead to a world war.

The US Secretary of State said that they had reached an "agreement on many of the basic principles" for an end to the crisis in Kosovo, but not on an international force for the Yugoslav province.

Those basic principles included

• An immediate end to the violence and repression in Kosovo.
• The withdrawal of all Yugoslav security forces from Kosovo.
• Refugees should be allowed to return to the province.
• International organisations be given unhindered access.

But Mr Ivanov said Russia's demand for the ending of Nato bombings against Yugoslavia remained unchanged.

Despite the lengthy meeting, the BBC diplomatic correspondent says its only obvious achievement is an agreement for Russia and the United States to continue working together.

Military reinforcements

The UK announced that it would be boosting its forces to over 6,300 on the border with Kosovo. Prime Minister Tony Blair said an extra 1,800 soldiers were being sent to enable the UK to help ensure refugees could return to Kosovo in safety.

And France is to send an extra 700 soldiers to the region.

The deployment comes a day after Nato foreign ministers vowed to continue the air offensive until President Slobodan Milosevic complied with demands for the future of Kosovo.

Strikes

Fresh Nato strikes were reported on Tuesday in Kosovo's regional capital Pristina, on a Yugoslav army barracks.

Serb media sources said that Nato's 20th night of bombing targeted two oil refineries in Novi Sad, in the north, and in Pancevo near Belgrade.

The state news agency, Tanjug, said repeated bombing of the country's main oil refinery at Pancevo had put it out of operation for a long time to come.

However China, as well as Russia, called for the strikes to end after Nato attacked a bridge - hitting a Yugoslav passenger train and killing 10 civilians.

Beijing's Foreign Ministry expressed "regret" at the bombing of the bridge, and urged Nato to stop its campaign "alleviate the humanitarian disaster" in Yugoslavia.

Nato's General Clark reiterated that its pilots were under orders to do everything possible to avoid collateral, or civilian, targets.

He said the pilot and the alliance were sorry for what he described as an "uncanny accident".