US Secretary of State Madeleine Albright confirmed the decision at a joint news conference with UK Foreign Secretary Robin Cook in Washington on Thursday.

But she stressed that the alliance had complete confidence that air strikes would achieve Nato's aims.

"We do not favour the deployment of ground forces into a hostile environment in Kosovo. We do, however, feel it is prudent to update our plans and assessments," she said.

Military commanders were earlier instructed by Nato Secretary-General Javier Solana to revive plans for a ground intervention in the province.

Meanwhile, Nato denied trying to kill Yugoslav President Slobodan Milosevic after one of his homes in a Belgrade suburb was destroyed in an air attack early on Thursday.

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

And the Pentagon said the continuing Nato air strikes had inflicted damage on all four major routes from the Serbian heartland to Kosovo, cutting supplies to Yugoslav forces by half.

With no sign of a let-up in Nato's air campaign, Mr Solana told the Washington Post the decision to update alliance's ground forces option was to show the Yugoslav Government that "all options are on the table".

US Defence Secretary William Cohen acknowledged on Wednesday that a ground offensive "can happen very quickly".

He said while a ground assault was not being considered, such a campaign could include 200,000 or more Nato troops for a full invasion of Yugoslavia, or 75,000 troops for a limited ground operation in Kosovo.

However, UK Prime Minister Tony Blair denied the alliance had changed its position on the use of ground forces.

He said the objectives for the conflict were clear. "They were set out in the beginning, they have been repeated all the way through and they are quite simply that Milosevic must get his forces and his paramilitaries out of Kosovo.

"We must have an international military force that goes in to allow these people to go home."

Michael Williams reports on the bombing of the Milosevic residence

A decision by both the Czech and Slovak Governments on Wednesday will allow Nato to transport ground forces through their territory. The alliance now has a vital strategic land corridor from Germany to Yugoslavia's border with Hungary.

The Romanian parliament also voted overwhelmingly to grant Nato unrestricted access to the country's air space for its air campaign.

Madeline Albright: Nato is to review deployment of ground troops in Kosovo

Following Serbian accusations that the alliance had committed a "criminal act" and was attempting to assassinate President Milosevic, the US described the president's home in the Dedinje suburb of Belgrade as an integral part of the overall military command structure for Yugoslav forces.

Pentagon spokesman Ken Bacon said: "We are not targeting President Milosevic or the Serb people. We are targeting the military and the military infrastructure that supports the instruments of oppression in Kosovo."

Nato targeted President Milosevic's political HQ

The Yugoslav leader and his family were not in the house when Nato missiles struck. US law bans any attempt to assassinate foreign leaders.

But Nato has recently pledged to increasingly concentrate on targets directly associated with Mr Milosevic. It struck the heart of his political base on Tuesday night with an attack on an office block containing the headquarters of his governing Socialist party.

The attack on the Milosevic residence was one of a series of heavy detonations reported in the Yugoslav capital overnight.

(Click here for a map showing latest strikes)

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 return of refugees under an international peacekeeping force.

Milosevic: "Easy solution"

However, the Yugoslav president said in a US TV interview on Wednesday evening that it would be easy to find a solution to the Kosovo crisis if Nato stopped the bombing.

But he said that the province's problems could only be solved in direct talks between those who lived in Kosovo, without intervention by the Yugoslav Government or international bodies.

Mark Laity: "Alliance leaders are giving themselves room for maneouver"

The UN refugee agency, the UNHCR, has warned of a humanitarian disaster in Macedonia if the authorities continue to prevent aid reaching the thousands of Kosovo Albanians trapped in a mountainous border area.

• Nato: Milosevic not target
• Ground troops: How it could be done
• Aid block risks lives, says UN
• Tony Blair's role in the crisis
• Land corridor opens for Nato troops