Nato has welcomed the German plan as "useful", but says it has no official status.

Under the German proposals, Nato would pause its bombing campaign against Yugoslavia for 24 hours if President Slobodan Milosevic began withdrawing his forces. A permanent end to attacks would follow a complete withdrawal.

A peacekeeping force and a transitional administration would then be established with the authorisation of the United Nations.

"It's a very useful effort and a necessary effort to begin reflection ... as to how we are going to handle the diplomacy of the end game," Nato spokesman Jamie Shea said of the German plan.

"But it's simply at the moment what you might call a 'food-for-thought' paper."

The ideas are likely to be discussed at a meeting of European Union leaders in Brussels on Wednesday, which is UN Secretary-General Kofi Annan is due to attend

Both Western countries and Russia, which condemns the bombing, see Mr Annan as a possible mediator in the crisis.

It is not yet clear whether the German plan will be formally discussed.

Overnight strikes

BBC Diplomatic Correspondent Nicholas Witchell: "Nato is increasing the pressure"

Nato has been continuing its air strikes against Serbia overnight. Yugoslavia says Nato planes targeted a hydroelectric plant and a railway bridge linking Belgrade and Montenegro.

The Bistrica hydroelectric plant is near the town of Nova Varos in the south of the country.

The Yugoslav news agency, Tanjug, said two bombs or missiles hit the plant at about midnight.

The BBC's Duncan Kennedy: "Nato will be watching the situation in Kukes carefully"

A nearby bridge linking Belgrade to the Montenegrin port of Bar was reported to have damaged in the same raid.

There were low-lying rain clouds over much of the country. Our correspondent in Belgrade says it is likely the bad weather caused the temporary lull in Nato's increasingly intensive air campaign.

(Click here for map of latest strikes)

Aid air drops considered

Within Kosovo, the plight of ethnic Albanians appears to be worsening.

British Defence Secretary George Robertson: "I'm confident the air campaign will win"

The United Nations food agency has warned that the province is facing a severe and long-term food shortage because of the conflict.

In a special report, it said Kosovo's agricultural and food processing industries have been devastated, with most fields abandoned and huge numbers of livestock dead.

Western officials have given conflicting numbers of the number of displaced ethnic Albanians in Kosovo.

French Foreign Minister Hubert Vedrine put the figure at 200,000, saying they were grouped in three different regions of the province.

But UK Development Secretary Clare Short put the number much higher at 800,000.

The EU, Nato, and the United Nations High Commissioner for Refugees (UNHCR) are looking at how best to provide aid.

French Co-operation Minister Charles Josselin has said France is considering air drops among other options, but sees such missions as risky.

Nato Supreme Commander General Wesley Clark said on Tuesday that air drops were unlikely because of the risk that they would be shot down by Yugoslav forces.

Latest UN figures say 536,000 people have fled Kosovo - half of them to Albania.

In Washington, President Clinton has told Congressional leaders of the difficulties in helping refugees and displaced people with air power alone.

He said he remained opposed to sending ground troops into Kosovo, but did not rule out such a move.

• Serbs warned over cross-border raid
• Refugees tell of systematic rape
• US and Russia offer hope
• Blair unveils troop build-up
• When war goes wrong