Nato planes attacked Serb positions in Kosovo and the sounds of battle could be heard from the Albanian side of the border, although reports say it is unclear exactly what is happening.

Tension has heightened in nearby refugee camps at Kukes, easily within range of Serb artillery, amid fears that the conflict could spread into Albania itself.

BBC's Jermey Cooke: There are unmistakeable sounds of battle

The main crossing point for refugees entering Albania is deserted because it is too dangerous to cross.

BBC correspondent Jeremy Cooke, who is in the border area, says all the indications are that the KLA has launched a fresh offensive. Video recordings from inside Kosovo show rebel forces moving freely in the border area but they clearly still face determined Serbian opposition

Show of strength

In a show of force, the Albanian army conducted military exercises with live ammunition in the valleys along the border.

More than a thousand ground troops took part, supported by tanks and rocket fire into the hills.

Aid workers fear for the safety of refugees in camps at Kukes

Aid agencies had feared the exercise, intended to show Albania is armed and ready if its territory is threatened, could provoke a response from Serb forces, endangering the lives of tens of thousands of refugees in the camps in Kukes.

However, Nato spokesman Jamie Shea denied the alliance was unhappy with the Albanian's actions. "(Albania) has the right to take any steps which it deems necessary to defend itself," he said.

Civilians under threat

The UNHCR continued to relocate Kosovo refugees from Kukes to other camps in the south, further away from the fighting.

Shelling from the Serbs in Kosovo has forced some Albanian villagers from their homes in the border region.