The International Criminal Tribunal for former Yugoslavia indicted Yugoslav President Slobodan Milosevic for war crimes on Wednesday and signed his arrest warrant, according to an unidentified source close to the tribunal.

US Secretary of State Madeleine Albright said it was not appropriate to comment on the report.

"The war crimes tribunal can make its own statement," she said.

The BBC's James Robbins: Evidence has been gathered over several years

Nato spokesman Jamie Shea also refused to confirm the reports saying they had no official news from the tribunal.

"For the time being this is speculation," he told the BBC.

The Yugoslav Ambassador to the UN, Vladislav Jovanic, told the BBC the charge was "another charade" and part of an attempt to demonise Yugoslavia.

Vladislav Jovanic: The move seeks to turn the population against the government and the president

The BBC correspondent in Belgrade, Mike Williams, says the charge makes it more difficult for Mr Milosevic to continue negotiating an end to the conflict in Kosovo.

The Russian peace envoy Viktor Chernomyrdin is due to fly to Belgrade to discuss the latest diplomatic developments with Mr Milosevic - but it is not yet clear whether or not he will abandon his plans in light of the latest development.

Call for ground troops

Yugoslav Foreign Ministry Spokesman Miloslav Paic: "This is the most ridiculous news I have heard so far."

As prospects for a diplomatic solution looked dimmer, a senior Kosovo-Albanian leader called for Nato to send in ground troops, saying strikes alone were insufficient.

Speaking in Pristina, Adem Demaci criticised Ibrahim Rugova, and other prominent Albanians who fled Kosovo during the conflict, for signing a number of joint statements with Yugoslav officials.

He was speaking shortly after Serb forces shelled three Albanian villages in Kosovo.

Jamie Shea: Let's see what the tribunal says tomorrow

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

Nato jets are reported to have killed three people as a southern industrial zone, Ralja, came under attack in overnight raids.

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

Local media reported that more than 50 missiles were fired at the city and its suburbs during the night, and two children were killed when Nato bombed the village of Radosti in southwest Kosovo.

The Yugoslav news agency Tanjug said powerful explosions were heard from a nearby military airport in Batajnica.

It also said a Nato missile struck a Yugoslav trade ministry building in Belgrade but did not explode.

Residents reported seeing flashes from the direction of the capital's centre.

Meanwhile, the Pentagon announced a rare ban on the retirement of thousands of key US Air Force personnel.

Announcing the move, Pentagon spokesman Ken Bacon said it would cover 120,000 of the Air Force's 360,000 troops, would apply to pilots, navigators, air traffic controllers and others, and would remain in effect as long as reservists were being called up for the conflict.

Makeshift tents provide scant protection for the refugees

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.

There has been long-standing concern that refugee camps around Kukes could be hit by Serbian shells fired across the border.

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.

In Macedonia, Mr Rugova, has visited refugee camps at Blace and Stenkovac.

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

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

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

---