Thursday night's clashes followed threats by ethnic Albanian guerrillas that they would escalate the conflict if the Macedonian authorities rejected their unilateral offer of a truce.
As sporadic gunfire continued around Macedonia's second city, a K-For spokesman said civilians suffering from shrapnel wounds had been taken across the border into Kosovo for treatment.
Tensions are running high in the region as Tetovo's Albanian community prepares to bury a father and son gunned down by Macedonian security forces in a failed grenade attack.
The Macedonian army says it will take up positions on the border with neighbouring Kosovo, and drive out the guerrillas. It is not clear whether the offensive has begun.
President Boris Trajkovski has given field commanders full authority to take whatever action they consider necessary to bring the insurgency to an end.
The situation in Macedonia is expected to dominate the European Union summit beginning in the Swedish capital, Stockholm, on Friday. President Trajkovski is to address the European leaders.
Rebel threats
Although the situation on Friday morning appeared to be relatively calm, there are fears that the conflict is spreading across Macedonia's northern borders.
Thursday night's clashes followed threats by ethnic Albanian guerrillas that they would escalate the conflict if the Macedonian authorities rejected their unilateral offer of a truce.
Following a sustained bombardment of guerrilla positions overlooking Tetovo, Macedonian officials said their forces had made some advances, sending the rebels into retreat.
However, the offensive appeared to have no immediate effect and a BBC correspondent in the city says the Macedonian army is not sufficiently well-equipped to pursue the rebels in the mountainous area between Tetovo and the Kosovo border.
Two Macedonian policemen were also reported injured in separate attacks reaching the outskirts of the capital, Skopje.
Tetovo mayor, Myrteza Ismaili said he feared the shooting would escalate after the death of two ethnic Albanians shot in an apparent grenade attack.
International efforts
As the hostilities spread, Macedonian and ethnic Albanian political leaders repeated their calls for an end to the rebellion.
After meeting a top EU delegation in Skopje President Trajkovski said his country was committed to deal with "terrorism".
Swedish Prime Minister Göran Persson - current president of the EU - said the summit in Stockholm would reaffirm support for the Macedonian government.
"Weapons won't rule" in the Balkans, he said.
Nato has agreed to boost its presence on Macedonia's border with Kosovo where the rebels are believed to receive their supplies.
The United States has ordered spy planes to be deployed in the area to monitor the movement of the rebels, but says it will not send additional troops.
More than 22,000 people have fled the conflict so far.