The mistake followed a series of Nato air strikes in the Morina border area as intense fighting continued between Kosovo Liberation Army guerrillas and Serbian forces.

Although this is one of Nato's most embarrassing mistakes, none of the Albanian forces it attacked appear to have been killed.

Reporting from the border area, the BBC's Jeremy Cooke says the strikes were heavy, with several waves American A-10s dropping laser-guided bombs.

Jeremy Cooke reports: "This was another highly visible Nato mistake"

As the bombs began to explode, Albanian soldiers guarding the Morina border point fled, apparently unsure whether the attackers were Serbian or Nato.

The border area has seen three days of heavy Serbian shelling following attempts by the KLA to open a supply route along the border.

Hundreds of refugees have passed through the area in recent weeks.

Yugoslav military chief dies

In an unusual announcement from the Yugoslav military, the air force deputy chief of staff is reported to have died while inspecting military units in "the first line of defence" against Nato air attack.

The Yugoslav military information service said on Tuesday that General Ljubisa Velickovic had died "in the line of duty".

It is not clear whether the death was the result of a Nato air attack - the military as a rule does not report casualties among the armed forces.

Russia hopeful for peace

The military campaign continued amid renewed diplomatic efforts, with Russia saying it has fresh proposals for solving the conflict.

The BBC's Bridget Kendall: All eyes are on the latest peace moves

Russian Balkan Envoy Viktor Chernomyrdin has been in Bonn, meeting his US and EU counterparts - Strobe Talbott and Martti Ahtisaari of Finland.

"This week must be decisive in the search for a compromise on how to direct the military conflict into a political channel," Mr Chernomyrdin said.

"All sides, including the United States, Europe and Russia have an enormous desire to find a political solution."

On Wednesday, Mr Chernomyrdin is expected to go to Belgrade for the fifth time since the crisis began.

His optimism has been echoed by Germany and France.

The new signs of optimism came as the Yugoslav authorities repeated their willingness to abide by the principles set out by the G8 countries for an end to the conflict.

However, the BBC Moscow Correspondent, Paul Anderson, says Mr Chernomyrdin has made similar predictions on previous occasions, which came to nothing.

There is still no indication that Belgrade would allow a Nato-led peace-keeping force to enter Kosovo.

Nevertheless, Nato military commanders are meeting in Brussels to determine how to bring the number of troops in such a force up to 50,000.

Civilian casualties mount

Nato's raid over Albania followed reports of three Nato blunders in the past two days.

The BBC's Hugh Schofield in Brussels: "Missiles went astray"

Nato has admitted that a bomb went astray during an attack on an army barracks in the southwest Serbian town of Novi Pazar.

The Yugoslav authorities said 23 people were killed when Nato missiles hit an apartment building in the town.

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

Nato spokesman Jamie Shea said that five out of six weapons hit the army barracks, but one went astray, overshooting the target by about 60 metres, and may have hit residential buildings.

He said Nato could not confirm any civilian casualties but regretted any unintended damage.

At least 28 civilians were reported killed in two other attacks in the previous 24 hours.

President Milosevic attacked such actions, saying they could damage the peace process.

• Albania warns of Serb tank advance
• Picture gallery: Nato destruction
• Civilian deaths 'necessary price'
• Times journalist 'amazed to be alive'
• UK defends record on Kosovo refugees

---