The Serbian authorities say up to eight cluster bombs fell on Korisa village during two night-time raids by Nato aircraft on Thursday.

They insist there were no military targets in the area but Washington says there was "substantial and significant" Serb shelling in the area.

If the Serb figures are confirmed Korisa will be the worst Nato blunder of its air campaign in terms of fatalities.

BBC Diplomatic Editor Brian Hanrahan: "The allegation is that this is Nato's biggest mistake of the war so far"

US State Department spokesman James Rubin said: "We do not know what damage may or may not have been caused by Nato aircraft. We don't want to jump to conclusions."

There has been no independent confirmation of the Serb reports but some foreign reporters have been allowed to visit the village.

Pictures shot by foreign television crews showed a number of charred bodies - including those of at least two children - smouldering buildings and burned out tractors.

Grieving survivors remained in the area with around 50 women and children huddled, weeping in the cellar of a nearby house.

According to the Serbian authorities the majority of those killed and injured were women, children and the elderly. They say the victims were part of a convoy of 500 refugees travelling to Albania.

Jacky Rowland in Pristina: "Scenes of complete carnage"

BBC correspondent Jacky Rowland, in Pristina, said forensic work is being carried out on the bodies and body parts found at the scene to establish how many died in Korisa.

She says 79 bodies have so far been removed from the scene but Serb authorities say the final death toll could be higher.

In Brussels, BBC Defence Correspondent Mark Laity says Nato is having difficulty matching the time of the attack - about midnight - with its operations in the area. He says Nato has also denied using cluster bombs in the Korisa area.

The news of the devastation at Korisa came as Nato gave details of what it says was its heaviest 24-hours of bombing in the campaign against Yugoslavia so far.

(Click here to see a map of last night's Nato strikes)

The alliance says it has been increasing the frequency and force of its bombing in Kosovo, targeting the heavy armour of the Yugoslav military and special police units there, and taking all measures to avoid civilian causalities.

The BBC's Nick Childs: "Once again, Nato is on the defensive"

"Nato does not target civilians," Nato spokesman Jamie Shea told reporters at Friday's briefing in Brussels, promising a "full and thorough" investigation into the Serb claims.

In all 679 missions were launched in 24 hours, concentrated on Serb forces on the ground in Kosovo.

Nato says 40,000 soldiers and armed police remain in Kosovo

The Yugoslav Ministry of Security Forces said it was halting the troop withdrawal announced on Sunday, because Nato had rejected Belgrade's "gesture for peace".

Officials say Yugoslav forces would now remain in Kosovo, until Nato troops were withdrawn from neighbouring countries.

Nato says it had no evidence of any significant withdrawal of Yugoslav forces.

Fall-out clears

The diplomatic fall-out from the Nato bombing of China's embassy in Belgrade appears to be easing.

The embassy bombing caused widespread anger in China

After repeated US apologies Chinese President Jiang Zemin and US President Bill Clinton held their first telephone conversation since last Friday's attack which Nato said was a result of using outdated maps.

Mr Jiang had refused to speak to the US president in the immediate aftermath of the incident.

The White House said Mr Clinton expressed his regret for the three Chinese deaths, during what was described as a "constructive" 30 minute conversation.

Officials say Mr Jiang only agreed to take the call after Mr Clinton met Beijing's ambassador in Washington and signed a book of condolences.

Refugees visit

Mr Clinton's wife Hillary visited refugees from Kosovo during a one day visit to Macedonia.

Mrs Clinton at Stenkovec camp "to show refugees they are not abandoned"

Ater touring the Stenkovec camp near the capital Skopje, home to more than 23,000 refugees she told reporters that the US would "not allow the evil perpetrated by President Milosevic to prevent the refugees from returning to their homeland.

"These people all want to go home", she said.

The Macedonian camps have been the scene of tension and unrest as refugees complain of overcrowding and mistreatment by local police.

UN Secretary General, Kofi Annan, has announced that he will visit Macedonia and Albania next week, to assess the needs of the refugees there, and to show solidarity with their suffering.

The BBC's Peter Grant reports on the latest attacks

Earlier, Russia announced it is to make a new diplomatic effort to end the Kosovo crisis with Balkan envoy Viktor Chernomyrdin, visiting Belgrade next week for talks with President Milosevic.

He will be accompanied by Finnish President Martti Ahtisaari, the next President of the European Union.

• Picture gallery: Village 'bombing'
• Clinton phones Chinese president
• First Lady visits refugees
• Refugees recount fresh atrocities
• Bulgaria says Nato bombing will succeed
• Macedonia complains over Nato aid

(click here to return)