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"I don't want to be overly cautious or dampen down expectations irrationally or foolishly, but I do think that the whole business has taught us to be very very firm and very clear that things aren't done until they actually happen."
Mr Blair spoke early on Wednesday as talks between Nato and Serb generals in a tent in Macedonia broke up briefly while the Serb delegation contacted Belgrade. The two sides later resumed their talks.
Nato spokesman Jamie Shea said it appeared the discussions were moving closer to an agreement on outstanding military and technical issues.
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But the delay in the meeting has prompted fears the Serb generals are forcing a shift in the terms of the resolution being prepared for approval by the United Nations Security Council.
Mr Blair said he had no reason to believe this was happening, but warned Nato had to stand firm and hold out the threat of continued bombing.
"I understand that reasonably good progress is being made, but you really can't rely on this being settled until it is settled.
"I haven't had any indications that there's backsliding but on the other hand my experience of this business right from the start has been that there will be backsliding unless people know you're prepared to use force and they know that the determination and resolve with which we embarked upon this remains.
"I also think it's very important to emphasise yet again - there must be no negotiating away the essential Nato demands we made right from the beginning and we secured those in the draft UN resolution and we must watch very carefully to make sure that the Serbs don't try to diminish the force of those in any negotiation over the military and technical agreement."
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Later, Defence Secretary George Robertson told the daily Ministry of Defence briefing that plans were being developed for ground forces to enter Kosovo at the "earliest opportunity".
Nato had President Milosevic "locked in a cage", he said.
"What I can tell you is that I am both cautious and hopeful this morning that this terrible conflict in Kosovo may be nearing its conclusion.
"Cautious, because President Milosevic's record of double dealing and bad faith speak for themselves, but hopeful because we have made progress in the past 24 hours."
Mr Robertson said that if a draft UN resolution was agreed and implemented meaning the refugees could return home "we can say with quiet pride that Nato has achieved its objective".
But he added: "We are not quite there yet."
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10 Downing Street
Nato
Serb Ministry of Information
Kosovo Crisis Centre
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