The Organisation for Security and Cooperation in Europe (OSCE) said a young man and young woman died in the attack on the villages of Pogaj, Kishaj and Sahani.

Nato jets have also been seen bombing areas just inside Kosovo.

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

Visiting the northern Albanian town of Kukes, Nato's commander in Albania, Lieutenant-General John Reith, said he had reports that Serb forces had been moving into positions close to the border crossing, with artillery behind them.

Makeshift tents provide scant protection for the refugees

There has been long-standing concern that refugee camps around Kukes could be hit by Serbian shells fired across the border, says the BBC's Peter Biles in Kukes.

Refugees moved

The United Nations refugee agency, the UNHCR, has begun a new phase in the process of moving refugees out of the Kukes camps to new locations on the coast, further south.

About 30,000 refugees are being moved away from the border due to fears of shelling and water shortages.

Orla Guerin on the Macedonian border: Macedonia is near breaking point

"In the open, tents don't offer much protection from shrapnel. The last thing I want is the Serbs lobbing a few rounds into this place," said Lt Gen Reith.

Meanwhile the Kosovar Albanian leader, Ibrahim Rugova, has visited refugee camps at Blace and Stenkovac in Macedonia.

Ibrahim Rugova: Calls for Nato security presence in Kosovo

He said refugees would not go home unless Nato could provide a security presence inside Kosovo.

Talks continue

Diplomatic efforts to find a solution to the crisis continued with Russian peace envoy Viktor Chernomyrdin meeting US Deputy Secretary of State Strobe Talbott for more than an hour in Moscow.

European Union representative and Finnish President Martti Ahtisaari was also due to join them.

Mr Chernomyrdin is pressing for an immediate halt to the airstrikes and has warned the escalation of attacks could wreck the negotiations.

He plans to fly to Belgrade on Thursday with Mr Ahtisaari to meet with President Milosevic, who he says is willing to accept various elements of a peace deal, such as Greece and Portugal forming part of an international peacekeeping force in Kosovo.

Observers banned

Steve Pratt pictured with his wife

In the trial of three aid workers accused of spying in Belgrade, the court has barred international observers and relatives from attending the hearing.

Australian ambassador Charles Lamb said he was disappointed after discussions with the government had allowed him to hope he would be allowed in.

Mike Williams reports: "For almost two weeks, nothing was heard of the aid workers"

The trial of Care workers Steve Pratt and Peter Wallace from Australia and Yugoslav Branko Jelen is taking place in a civilian court.

Nato said early on Wednesday it had carried out another record attack on Yugoslavia with 284 attack flights in the previous 24 hours.

President Milosevic's villa west of Belgrade was targeted for the second time.

Alliance chiefs say the villa contains a command and control bunker. It is believed to be the president's main hideout, but it was not known if he was there at the time of the attack.

• Refugees greet Rugova
• History damaged by bombs
• UN accuses Serbs of ethnic cleansing
• General sent to stop troop mutiny
• Istok prison's unanswered questions

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