The incident appears to mark a worsening of relations between the rebels and K-For.
British troops serving with the Nato-led peacekeeping mission in Kosovo, K-For, have been shot at by Albanian rebels while on patrol near the boundary with Serbia.
The soldiers were part of an observation post set up to prevent the flow of men and weapons to and from the province.
The incident appears to mark a worsening of relations between the rebels and K-For.
According to a K-For spokesman, the soldiers came under fire after they spotted a group of 10 armed men making their way from Serbia into Kosovo near the town of Zegra.
One of the troops called on the rebel group to stop. As he did, the men opened fire. They then retreated back into Serbia.
The soldiers subsequently withdrew from their position to avoid further clashes.
Talks with rebels
This is the first time British troops have been targeted.
Previously, a joint patrol of Russian and American troops was shot at late last year.
On Wednesday, a senior K-For officer held talks with rebel leaders to prevent just such a clash.
The shooting follows increased tension on the boundary as K-For steps up patrolling in the area.
It also marks a deterioration in relations between the two sides.
Spokesman arrested
The rebel group is fighting for the independence of three Albanian-populated towns in southern Serbia and uses a five-kilometre-deep military exclusion zone on the boundary to launch attacks on Serbian security forces.
On Wednesday, American soldiers arrested the political spokesman for the rebels, Pacir Shiciri. They accused him of illegally entering Kosovo.
He was arrested with two journalists and accused of being a member of an illegal ethnic Albanian group.
The arrest is an embarrassment to K-For since Mr Shiciri is used by the military alliance as the main go-between in talks with the rebels.
Incidents like these are unlikely to ease the increasingly strained relations with the rebels.
While K-For has responsibility for the boundary with Serbia, it wants to avoid at all costs coming into direct conflict with them.
Such a step would risk a backlash from Kosovo's majority Albanian population.