The offer comes as pressure is mounting on Mr Milosevic to resign, both abroad and at home.

More Serb homes and businesses are being looted by angry Kosovo Albanians, and the international peacekeeping force appear unable to prevent the attacks.

Announcing the reward, the State Department in Washington said it did not want to encourage anyone to try to capture Mr Milosevic, but urged people to contact the American authorities with information.

The president, along with four other senior figures - including the President of Serbia, Milan Milutinovic - have been indicted by the International War Crimes Tribunal in The Hague.

They are accused of being personally responsible for the murder, deportation and persecution of hundreds of thousands of Kosovo Albanians.

Ben Brown reports: "Today Nato's top brass came to Kosovo"

Nato Secretary General Javier Solana said earlier that with Mr Milosevic in power, the Serbian people could not enjoy "integration into the Euro-Atlantic community".

He said Mr Milosevic was "the embodiment of what has made the Balkans so unstable for so long".

The international peacekeeping force, K-For, has already made the first arrest of a war crimes suspect in Kosovo.

British soldiers arrested a Serb on Thursday, alleged to have been involved in a massacre of 43 Kosovo Albanians in the village of Slovinia.

Revenge attacks continue

Supreme Commander for Europe, General Wesley Clark, has said he will ask Nato countries to speed up the deployment of K-For troops, following reports of looting and revenge attacks on Serbs by returning Kosovo Albanians.

The general, who was visiting Pristina with Mr Solana, said K-For troops would do all they could to protect both communities.

But hours later, Serb shops and businesses in Pristina were ransacked by a large and angry crowd who moved into the city centre as night fell.

Brian Hanrahan reports: "It's unlikely that the end to the bombing will relieve the daily grind"

BBC correspondent Michael Voss says K-For soldiers were unable to cope, as the looters moved from one Serb-owned building to another.

Many Serbs in Pristina are in a panic after the killing of three Serb employees at the university.

In the town of Pec, K-For is planning to help evacuate more than 400 Serbs who are under siege by armed Kosovo Albanians.

The United Nations spokesman, Fred Eckhard, has said more than 3,000 police are urgently required by the peacekeeping mission in Kosovo.

Yugoslav opposition to hold demonstrations

The opposition Alliance for Change has denounced the lifting of the state of war as a public deception, on the grounds that numerous laws restricting the media and public gatherings remain in force.

The Yugoslav Parliament voted to end the state of war on Thursday, which was declared in response to Nato's bombing campaign.

However, a proposal to keep some of the government's emergency powers over banking and the economy is to be voted on by deputies on Friday.

The Alliance has said it is launching a petition to demand democratic reforms and the resignation of President Milosevic, and would hold rallies in at least 10 Serbian cities.

The Alliance said it would hold its first rally - in the city of Cacak - on Tuesday by when the state of war should have been ended.

Refugees returning

Conditions for the returning refugees are improving, according to the United Nations refugee agency, UNHCR.

(Click here to see a map showing refugee movements)

The agency's envoy to the Balkans, Dennis McNamara, said the UNHCR would organise transport to those cities from refugee camps outside Kosovo.

More than 200,000 Kosovo Albanians have returned home since the end of the conflict, ignoring warnings about landmines, booby traps and unexploded weapons in the province.

• Yugoslavia ends state of war
• Kosovo plea to end ethnic violence
• Montenegro stands up to Serbia
• Serbs: 'Where is K-For?'
• Kosovo Kid replaces bullets with fists