The vehicle was cut in two by the strike, near Luzane bridge, 20km (12 miles) north of Pristina.

Meanwhile the Yugoslav state news agency Tanjug says President Slobodan Milosevic has ordered the release of three captured US soliders.

American civil rights campaigner Jesse Jackson, who led a mission to Belgrade to get the men freed, said they will be handed over on Sunday.

Reporting the bus attack, Tanjug said an ambulance sent to the scene was hit in a second Nato strike.

A reporter for the French AFP news agency, who said he saw the attack, estimated that 23 people had been killed.

The bus was on a regular express service, linking Pristina and Nis, reports say.

One section plunged off the bridge onto fields below. The other portion remained burning on the bridge for more than an hour.

Passengers' belongings were strewn along the road and riverside.

Reports of the bus being hit began circulating as Nato briefed reporters in Brussels on its latest missions.

Spokesman Colonel Konrad Freytag said the alliance had no immediate "evidence" regarding the incident.

Col Freytag said the alliance had attacked transmission towers and control buildings of the Yugoslav radio relay network in seven places.

Reports from Serbia say that four Nato missiles struck villages near the town of Kraljevo, south of Belgrade, knocking the local television station off air.

Foreign monitors, meanwhile, say that an Albanian village came under fire from Yugoslav forces on Saturday.

(Click here to see a map of recent Nato strikes)

Prizren targeted

The largest exodus of Kosovar refugees for a fortnight has crossed into Albania and Macedonia, apparently after the southern town of Prizren became the focus of Serb forces.

Morini crossing in Albania saw heaviest traffic

One thousand refugees an hour are crossing into northern Albania as Kosovo's second city Prizren is emptied of its ethnic Albanian population, aid officials say.

The UN refugee agency says the "final cleansing" of the southern city may be underway.

Kris Janowski, from UNHCR, said: "There was a huge line of cars, pedestrians and tractors backed up 35km all the way to Prizren.

Kris Janowski of UNHCR: "Like a scene from WWII"

"We have to reckon with tens of thousands of people coming in the next days."

Previously Prizren had been spared the violence seen in towns like Pec and the capital, Pristina.

Refugees arriving on Friday said Serb forces entered the town at dawn and, using megaphones, ordered the inhabitants to leave.

"Half of Prizren left their homes today," said one young woman interviewed after crossing into Albania on Friday.

Diplomatic solution elusive

Russia's special envoy to the Balkans has played down the prospect of a breakthrough in his attempts to resolve the Kosovo crisis.

Kevin Connolly: "Prospects for a peace deal in the immediate future are bleak"

"It will be difficult to settle all political issues, but there is a chance," former Prime Minister Viktor Chernomyrdin told reporters.

"It's not a big chance, but a chance. I think we can't let this pass by."

Mr Chernomyrdin briefed President Yeltsin on Saturday about the five hours of talks he held with Yugoslav President Slobodan Milosevic.

Earlier, Mr Chernomyrdin was quoted as saying a solution was "close", but the recent comments suggest he is less optimistic than he originally appeared.

He said the talks had made "some progress" and that he had discussed sending some kind of international force into Kosovo under the control of the United Nations.

But asked whether such a force would include Nato troops - a key Western demand - Mr Chernomydrin merely said: "Let's talk about that later."

Release promised

Rev Jesse Jackson held three hours of talks with President Milosevic in his attempt to secure the release of the three US soldiers captured a month ago on the Yugoslav-Macedonian border.

The promised release was announced through Tanjug shortly after the meeting finished.

Mr Jackson was allowed to briefly see the three soldiers on Friday.

Other top stories

• UN rights chief slams Nato bombings
• Refugees speak of slaughter at Meja
• Milosevic 'to release' US PoWs
• Chernomyrdin finds Kosovo peace elusive
• US warns against defying oil embargo

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