The reports said the attack on Surdulica was the second time that Nato had hit civilian targets in the town.

Officials say the town was hit by four bombs at around midnight, two of which landed on the old people's home. Another building in the grounds of the sanatorium was also destroyed.

Nato military spokesman General Konrad Freitag said on Monday that warplanes struck two targets in Surdulica - an ammunition storage depot and a military barracks - but denied that missiles had struck a sanatorium.

"Both these targets were legitimate military targets and both were already targeted," he said.

"All munitions hit the planned aiming points, Nato cannot confirm any Serb claims of casualties or collateral damage."

The BBC's Jon Leyne: Local people say the bridge was packed with traffic

Reports of the strike came just hours after Nato admitted attacking a bridge in the south-central town of Varvarin.

The Yugoslav state run news agency, Tanjug, said that at least 11 civilians were killed and 40 injured when four missiles hit the bridge.

Nato issued a statement on Sunday, confirming four planes had attacked the bridge over the Velika Morava river at Varvarin. All "precision-guided ordnance" had hit the target, it said.

The alliance described the bridge as a "designated and legitimate target". Nato spokesman Jamie Shea said: "Nato does not attack civilian targets, we attack exclusively military targets and take every precaution to avoid inflicting harm on civilians."

Jamie Shea: We have no information so far that we were responsible

Nato is understood to have struck at 1pm local time (1100GMT) on Sunday. Tanjug said the area would have been crowded with people attending the town market.

Witnesses said four cars fell into the River Velika Morava during the first waves of attacks and rescuers who went to help victims were hit in a second wave of bombings. They said the area was littered with pools of blood and human body parts.

The injured were reportedly taken to hospitals in nearby Krusevac and Paracin.

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

The bridge is thought to be the sole remaining direct link from the north to the south central region of Serbia.

Power stations hit

In further attacks on Sunday night, Serb radio reported that the southern city of Nis was blacked out after missiles hit a power station there shortly after midnight local time (2200 GMT).

The BBC's Hugh Schofield: Nato will face pretty tough questioning

The independent Beta news agency said another power plant at Obrenovac, outside Belgrade, was also hit.

After Sunday's raids, a senior Serb official said 17 of the country's 19 television transmitters had now been destroyed.

A local man examines the devastated bridge

Tanjug also reported a car carrying foreign journalists in Kosovo was hit on Sunday day. The agency said the driver of the car was killed and one British, one French and one Italian journalist had been injured.

The UK Foreign Office said it had been informed that a journalist from The Times newspaper, Eve-Ann Prentice, was being treated in a hospital in Prizren.

A colleague at The Times said an interpreter travelling with the journalists had also been killed.

Coastguard rescue

Elsewhere, Italian coastguards rescued a group of about 500 Kosovo Albanian refugees whose fishing vessel ran into difficulties while they were being smuggled across the sea from Montenegro to Italy.

The refugees were taken to the Italian port city of Bari, where they have been given temporary asylum.

• Belgrade diplomacy leaves Nato unmoved
• 'No plans' for Kosovo call-up
• Conspiracy theories take shape
• Nato promised 'hell' in Kosovo
• Times reporter leaves hospital

---