The residence, in the exclusive Dedinje suburb, was blown out, one wall completely demolished. Belgrade said nobody was there at the time.

Nato justified the attack saying the building was a "command and control facility" for the military, but it denied Mr Milosevic himself was a target.

The report came as Nato commanders were instructed by Secretary-General Javier Solana to revise and update plans for a possible deployment of ground troops in Kosovo.

In Belgrade, a Russian peace mission led by special envoy Viktor Chernomyrdin has been meeting the Yugoslav leader.

The former Russian prime minister was expected to deliver proposals for a ceasefire and the withdrawal of military forces from the province, followed by the return of refugees under an international peacekeeping force.

President Milosevic had appeared on US television on Wednesday evening, saying it would be easy to find a solution to the Kosovo crisis if Nato stopped its bombing campaign.

But, in the rare interview, recorded in Belgrade on Monday, that the province's problems could only be solved in direct talks between Yugoslavia and Kosovo Albanians - without international mediators.

(Click here for a map showing latest strikes)

Michael Williams reports on the bombing of the Milosevic residence

Nato has said it is increasingly concentrating on sites directly associated with Mr Milosevic, but insists the president himself is not a target.

It struck the heart of his political base on Tuesday night with an attack on an office block containing offices of his governing Socialist party.

The BBC's Jon Sopel: "The most vexed question of all - when will it be safe to deploy ground troops?"

The alliance's secretary-general told the Washington Post that Nato's air campaign, now in its fifth week, would succeed. Mr Solana also said the "circumstances" of the conflict had made it necessary to show the Yugoslav Government that "all options are on the table".

He said in a telephone interview with the US newspaper, however, that the alliance was far from any political decision to use ground troops.

American and British officials are conveying the same message, saying that there is no question of Nato troops fighting their way into Kosovo.

Nato targeted President Milosevic's political HQ

However, both the US President, Bill Clinton, and the UK Prime Minister, Tony Blair, meeting for the first time since the air strikes began, have refused to exclude the deployment of ground troops.

The US has said it will support the deployment of ground troops if they are necessary to win the battle over Kosovo.

White House spokesman Joe Lockhart said there were still no plans for a ground invasion but the strategy could be "updated".

Mr Blair also refused to rule out their use on Wednesday, telling MPs in the House of Commons that "all options were being kept open".

Land corridor

Nato's range of options were widened on Wednesday when both the Czech and Slovak Governments voted to allow the alliance to transport ground forces through their territory. This means that there is now a land corridor for Nato to move ground forces from Germany to Yugoslavia's border with Hungary.

Milosevic: "Easy solution"

The alliance has also been given broader air options after the Romanian parliament voted overwhelmingly to grant Nato unrestricted access to the country's air space for its air campaign.

A further blow for Yugoslavia came with a European Union decision to ban oil shipments to the country.

The proposal, due to come into force next week, will bar the sale and supply of oil and oil products from EU countries to the former Yugoslav republics, including Montenegro. Oil destined for humanitarian purposes will be exempted from the ban.

With no decision yet over ground troops, Nato has continued its air strikes on Yugoslavia, with a number of heavy detonations reported in the Yugoslav capital, Belgrade.

As well as the attack on President Milosevic's residence, Serb media reported that 20 missiles hit the airfield in Batajnica and 10 missiles targeted the Krusik factory in Valjevo, damaging apartment buildings and the hospital.

The explosions, in the west of the city, appeared to be from the direction of the River Sava. Heavy anti-aircraft fire followed.

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• Land corridor opens for Nato troops