In his first major interview with a foreign journalist since Nato action began, President Milosevic said a settlement should be negotiated between the people of Kosovo without outside intervention.

The interview was broadcast just hours before Serbian media reported that Nato had bombed the dictator's luxury private residence in the Belgrade district of Dedinje at about 0400 local time (0200 GMT). President Milosevic and his family were not at home.

Speaking in English, Mr Milosevic told Houston-based KHOU TV: "There was never a policy of this country and my policy to expel any citizen of Yugoslavia from any part of this country.

"I believe that when aggression stops, when bombing stops, then it will be very easy to continue (the) political process."

Failed peace talks in Rambouillet and Paris showed negotiations should be "between those who will live in Kosovo...not between (the) government of Yugoslavia or (the) government of Serbia and, let us say, representatives of international community."

President Milosevic: "US wants our territory for themselves and Nato - the Albanians are just an excuse"

He blamed Nato for the flood of refugees from Kosovo and suggested that Nato fighters deliberately bombed a refugee convoy last week "to send a message to them it's not their business to come back".

"When they started their damn bombing and they started their dirty aggression against this country, there was not one single refugee. When they started bombing, refugees appeared, of course, as a result of bombing, and everybody knows it," he said.

President Milosevic said he would accept Kosovo's autonomy but not independence, because "Albanians" already "have their state that is Albania".

One the bombing stops, Mr Milosevic said, Serbia was "ready to accept UN civilian mission...without representatives of the countries who participate in aggression against our country."

"We have nothing to hide," he said, adding that Serbia had a history of protecting minorities during Balkan wars with Croatia and in Bosnia Hercegovina.

But he refused to accept any aid organisations except the UN High Commission for Refugees and the International Red Cross, accusing other aid agencies of collaborating with the "killers, rapists, kidnappers and drug dealers" of the Kosovo Liberation Army.

He also accused Nato of conducting two wars against Yugoslavia - a propaganda war and military war - and said foreign media organisations like CNN, Sky and the BBC were "paid to lie".

President Milosevic gave stark warning of Serbia's intention to resist the use of Nato ground troops, a subject that was being discussed by UK Prime Minister Tony Blair and US President Bill Clinton on Thursday.

"When our soldiers are dying, they know why they are dying. They are dying for their homeland, for their fatherland. "

"And for what will die your soldiers 5000 miles from home?" he asked.

He reassured the US that three of its soldiers, taken prisoner on 31March, would be treated according to the Geneva Convention.

"We are respecting prisoners of war. Nothing will happen to your soldiers. They are treated well," he said, adding he was unaware the Red Cross had been refused access to the men.

"I don't know that they were not allowed. I don't know where the Red Cross is to ask for that. If there is a Red Cross mission that is under Geneva Convention, they can see them," he said.

The interview was conducted in the presidential palace in Belgrade on Monday by Dr Ron Hatchett, a military analyst for the CBS-affiliated KHOU.

Mr Hatchett has been reporting for the station from Belgrade since shortly after the Nato bombing began last month, but returned to the US on Tuesday.