Speaking after briefing Nato members in Brussels, US special envoy Richard Holbrooke said that Yugoslav President Slobodan Milosevic and the Serb assembly had once again rejected the presence on the ground of Nato-led peacekeeping forces.

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Mr Solana said it was now down to his organisation to seek a peace deal: "The ball is now in Nato's camp."

Nato's top policymaking body on Monday authorised the secretary-general to order air strikes against Yugoslav military targets if Mr Milosevic refused to sign a peace deal and continued military operations in Kosovo.

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The US envoy said "we attempted without notable success to make clear that a Nato-led force is the best way to keep Albanians and Serbs from killing each other".

Emergency

His announcement came just hours after Yugoslavia declared a state of emergency, citing an "imminent threat of war, the danger of aggression against Yugoslavia by Nato".

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On Tuesday President Milosevic, rebuffed last-ditch diplomatic efforts by Mr Holbrooke, rejecting an autonomy plan for Kosovo's Albanians secured by Nato troops.

Ready to take action

President Bill Clinton warned Belgrade that the international community was prepared to act.

"If Mr Milosevic is not willing to make peace we are willing to limit his ability to make war."

Mr Blair told the UK Parliament: "The potential consequences of military action are serious. The consequences of not acting are more serious."

He said military action would be "to save thousands of innocent men, women and children from humanitarian catastrophe, from death and ethnic cleansing by a brutal dictatorship".

However, there were signs of disagreement from Russia. Its Prime Minister Yevgeny Primakov had been due to visit Washington on Tuesday, but he cancelled his visit when already in mid-flight and returned home.

Mr Primakov said that the Russians did not think that all the political possibilities to solve the crisis in Kosovo had been used up.

With Nato strikes looming, most foreign governments, including those of the US and UK, ordered the closure of their embassies in Belgrade and instructed staff to leave.

No foreign troops

The peace plan, drawn up by the six-nation Contact Group on Yugoslavia, demands that a Nato force is deployed in Kosovo as peacekeepers.

President Milosevic has consistently refused to accept such a force and is supported by high-powered colleagues.

The peace plan would also give extensive autonomy to Kosovo.

Kosovo's majority ethnic Albanians, who are seeking self-rule for the province, have already accepted the peace proposals.