The United Nations had said the two sides had to act because there was a limit to what international peacekeepers could do to prevent violence, arson and looting in Kosovo.

The statement followed seven hours of talks involving the Kosovo Albanian leader, Hashim Thaci, and a mixed delegation of Serbs, including clerical figures and known opponents of the Yugoslav President, Slobodan Milosevic.

The K-For commander, General Sir Mike Jackson, was also at the meeting, which was hosted by the interim UN administrator, Sergio Vieira de Mello.

As the refugees return, ethnic tensions remain high

The statement said: "We urge all Kosovo inhabitants, whether of civilian or military status, to refrain and to actively discourage others from any acts of violence against their neighbours.

"Such actions are unacceptable ... those responsible will be brought to justice."

It was the first time that leaders of the two communities have put their names to such a statement.

Mr Vieira de Mello said it would be broadcast repeatedly on local radio and television.

Following the meeting, a series of regular inter-communal meetings are to be established, a joint crisis task force set up with K-For and the UN to deal with security problems, and local efforts promoted to encourage people to return home.

The BBC's Jon Leyne: "What was once a little rural village, has been all but destoyed"

The return of thousands of ethnic Albanian refugees has caused up to 70,000 Serbs to leave the province, fearing revenge attacks.

The exodus has undermined international hopes of maintaining a multi-ethnic balance in Kosovo.

(Click here to see a map showing refugee movements)

For its part, the UN refugee agency has appealed for donor nations to honour their cash commitments to help feed and shelter hundreds of thousands of returning Kosovo Albanians.

The UNHCR says it is running dangerously low on cash

The agency said it had barely enough money to fund its operations to the end of this month, and only about one-third of the $400m needed for refugees had been donated.

So far, more than 500,000 refugees have returned to the province, but more than 300,000 remain in refugee camps of neighbouring countries and the UNHCR says it is struggling to meet their needs.

Without an urgent increase in cash, the agency says it will not be able to fund the essential work needed in preparation for the onset of the harsh Balkan winter.

Border arrest

UN Correspondent Mark Devenport: "Appeal to donor countries"

In eastern Kosovo, US troops operating within K-For have detained five Yugoslav soldiers who appear to have crossed into the province illegally.

It is not clear whether the soldiers, all armed, intended to cross the border or whether it was an accident.

The incident took place on Thursday and K-For commanders have demanded that Belgrade account for the soldiers' actions.

Graves investigated

Investigators are uncovering new mass graves

Elsewhere, peacekeeping troops have discovered new mass graves, thought to contain up to 140 bodies, in the south-west of the province.

International war crimes investigators are examining sites around the villages of Celine and Nogovac, near the town of Velika Krusa.

All the victims are said to be Kosovo Albanians, allegedly murdered by Serb forces during the bombing campaign.

As international peacekeepers continue to deploy in Kosovo, it has emerged that Russia has been seeking to renegotiate the participation of some 3,600 of its troops in the K-For operation.

Nato commander General Wesley Clark said there had been "some creative reinterpretation" of the initial agreement reached in Helsinki last week, but most of this had since been resolved.

Russian officials had apparently been trying to renegotiate the territory in which they would be operating and gain a role in the political control of K-For.

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