Overnight, heavily armed security units continued pouring fire on to guerrilla bases in the hills overlooking the city.
The exchanges of fire over the past 24 hours have been the heaviest since the violence started last Wednesday.
But the BBC's Nicholas Wood, reporting from Tetovo, says government attempts to flush the rebels from the outskirts of the city do not appear to have succeeded.
The fighting around Tetovo - now in its fourth day - has intensified fears of a new Balkan conflict.
Germany re-deployed 400 soldiers of its contingent of 1,000 troops stationed in the city after their base came under fire on Friday.
A defence ministry spokesman said they were moving "to another, more secure, place near Tetovo".
Meanwhile, the United Nations High Commissioner for Refugees, Ruud Lubbers warned that the intensifying violence could cause a massive refugee problem.
"We simply cannot afford another humanitarian tragedy in the Balkans, where millions of people have been uprooted by violent conflicts in the last decade," he said in a statement.
Nato 'determination'
Heavily-armed police units have been pounding the guerrilla bases in the hills, with ethnic Albanian fighters continuing to aim heavy machine gun and automatic rifle fire at the city.
Click here for a map of the region
However, our correspondent says there are no signs yet that the Macedonian army is being deployed in any numbers.
Speaking during a visit to Athens, Nato Secretary-General George Robertson said Nato forces had reinforced their presence on the border between Kosovo and Macedonia and it was now part of their mission to close routes to prevent further incursions by rebels.
There are 5,000 Nato-led peacekeeping troops in Albania and Macedonia. They are there to provide logistical back-up to the 37,000 troops in Kosovo, and are not combat troops, said a Nato source.
Bombardment
Mortar rounds fell directly on Tetovo's central square on Friday, the first time fighting had reached the heart of the city, considered the unofficial capital of the ethnic Albanian minority.
One woman was injured, according to the Macedonian Interior Ministry.
Many residents of the city have fled, fearing an escalation of the violence.
"We have to leave" said one," we are caught in the crossfire."
The militants say they are fighting for equal rights for the Albanian population, who make up about a third of the population of Macedonia.
However, the rebels are widely believed to be seeking to annex Albanian-populated areas to Kosovo, in a bid to create a "greater Albania".
He said: "We are determined that the stability of [Macedonia] is not going to be threatened by a small number of extremists who prefer bullets to ballot votes."
Related to this story:
EU pledges support to Macedonia
(17 Mar 01 | Europe)
New Macedonia fighting erupts
(15 Mar 01 | Europe)
In pictures: Macedonia rebellion
(15 Mar 01 | Europe)
Eye-witness: Tension in Tetovo
(17 Mar 01 | Europe)
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