However, Nato remains hopeful that the Serbs will sign an agreement before the day is out, which will pave the way to an end of the 78-day bombing campaign.

Once the agreement is signed, the peacekeeping force K-For could be on the ground within 12 hours. Some 17,500 troops - a third of the total force - is already on standby in Macedonia.

Nato has said there may already be some signs that Serb forces are already preparing to withdraw.

"We do have some preliminary indications that Serb forces may be beginning to withdraw, although I would stress they haven't started withdrawing yet," Nato spokesman Jamie Shea said.

General Michael Jackson and Yugoslav generals have broken off their talks to allow the Serb delegation to consult Belgrade. They earlier broke for about three hours later to allow both sides to talk among themselves.

Ben Brown in Macedonia: Peace is still on hold

A source at the talks said the main sticking point was the timetable for the withdrawal of Serbian forces from Kosovo and the arrival of Nato troops.

"It is now back to the halls of power," the source said, adding that the details needed the approval of Yugoslav President Slobodan Milosevic.

UN ready to vote

The United Nations Security Council is waiting for a halt to Nato's bombing of Yugoslavia before it will discuss and possibly vote on the draft resolution drawn up by the G8 countries on Tuesday.

The resolution provides for the return of Kosovo refugees under an international peace force with substantial Nato participation, the disarming of the Kosovo Liberation Army, and an interim civilian administration for Kosovo under the UN.

In an apparent concession to Russian objections to joining a peacekeeping force under Nato command, President Clinton has now said that an acceptable level of co-ordination with Nato will be sufficient.

BBC's Jonathan Marcus: Nato is keeping up the military pressure

He is sending a senior American official, Strobe Talbott, to Moscow to discuss the issue.

Russian Defence Minister Igor Sergeyev said Moscow was preparing to send up to 10,000 troops into Kosovo.

But China also has signalled objections - particularly to giving peacekeeping troops wide-ranging powers, and to the full co-operation being demanded with the international war crimes tribunal, which recently indicted President Milosevic.

(Click here to see a map of last night's Nato strikes)

Nato kept up the pressure on Belgrade by continuing strikes against targets in Kosovo, even as the talks between Yugoslav and Nato military officials were taking place on the border.

The state-run Tanjug news agency said more than 100 missiles were fired at targets in Kosovo during an eight-hour period ending on Tuesday night.

But Tanjug said there were no overnight attacks around Belgrade.

Serb concern at KLA advantage

A BBC correspondent at the talks says it seems that the Yugoslav officers do not want to sign any agreement about the withdrawal of troops until Nato says it will cease its bombing campaign.

The BBC's John Simpson: All this to force an agreement which Milosevic could have had in March

The official Yugoslav news agency Tanjug said the meeting was "important" because it would prevent a security vacuum in Kosovo "in which Serbs living in Kosovo would be endangered".

Correspondents say that appeared to indicate Yugoslav concerns that the rebel Kosovo Liberation Army would try to fill the vacuum left by departing Serb forces before Nato troops arrived.

Hashim Thaci, the political leader of the KLA, says the rebel group is ready to publicly pledge that it will not attack Serb troops leaving the province.

• Main points of the draft resolution
• KLA 'ready to guarantee Serb safety'
• Hiding in the hills
• Russia and China 'discuss Kosovo peace'
• Blair: Nato could enter Kosovo in days