Speaking in the Bulgarian capital Sofia, Mr Blair praised the United States for its "vision and steadfastness".

His remarks follow reports of mounting tension between the United States and the UK over the possible use of ground troops in the region.

Mr Blair said: "Milosevic may have hoped for Nato to fracture but it hasn't happened. It will not happen.

"It has brought Europe and the US closer together. America has once again shown that it has the vision to see that instability, chaos and racial genocide in the heart of Europe will never affect Europe alone."

Repeating his calls for a massive programme of economic reconstruction for the region, including Serbia, after the conflict, Mr Blair also refused to back down over Nato's core aims.

He said: "There can be no compromise of Nato's essential aims: his [President Milosevic's] troops out; an international military force in; the refugees back home."

Outside Sofia University, where Mr Blair made his address, a small group of protestors gathered underlining tensions caused by Bulgaria's support for Nato action against its neighbour.

The prime minister's visit to Bulgaria is his second tour of the region since the Kosovo conflict began.

After leaving Bulgaria, Mr Blair will go to Albania, where the majority of the refugees who have fled Kosovo in the past eight weeks are sheltering.

Mr Blair will hold meetings with leading regional politicians and meet British troops and refugees.

Nato spokesman Jamie Shea said the prime minister would "pay tribute to solidarity of these neighbouring countries".

'No rift with US'

Tony Blair: Praise for US leadership

Mr Blair's speech downplayed rumours of a rift with the US over Kosovo which emerged in the press over the weekend.

The Sunday Times newspaper quoted a "highly placed government source" as saying Mr Blair had a "deep sense of frustration" at being unable to persuade US President Bill Clinton to send in troops.

But in an interview with the Observer, Mr Blair praised the US for its "commitment and leadership" in the Balkan campaign.

"The vast bulk of this military operation is being carried out by US forces, although Kosovo is a very long way from Kansas," the prime minister said.

Defence Minister John Spellar said a diplomatic settlement would come before ground forces were sent in.

"We have no plan for an opposed intervention in Kosovo," he said.

European Union foreign ministers are due to hold talks in Brussels with Kosovo Albanian leader Ibrahim Rugova.

They will also meet Russia's Foreign Minister Igor Ivanov to cement solidarity, despite the political upheavals in Moscow.