Diplomatic sources would not say exactly what the hold-up was, but Yugoslavia's Minister for Ethnic Minorities, Rasim Ljajic, said the Albanians had demanded more time for new consultations.

Nato's special Balkans envoy, Pieter Feith, left empty-handed after spending much of Saturday at an ethnic Albanian military command in the heart of the mountainous wooded territory the rebels occupy just east of Kosovo.

When the talks resume, he will try to persuade rebel leaders to sign a ceasefire and so take a first step towards political dialogue with the Serbs.

Serbs ready

The border region has suffered low-level conflict for more than a year - and the fighting continued on Saturday morning.

On Saturday guerrillas fired on police in the village of Lucane, on the edge of a Nato buffer zone running along the border of the Albanian-dominated Kosovo province with the rest of Serbia.

Nato troops have been accused of allowing guerrillas to move unhindered

On Friday one policeman was killed and three were injured, in what the Serbs described as a ferocious round of attacks which lasted most of the day.

Violence has also spilled into northern Macedonia in the past few weeks.

Fears are growing that the conflict might engulf areas of neighbouring countries with large Albanian-speaking minorities, such as Macedonia.

Albania-Macedonia talks

The Macedonian Foreign Minister, Srgan Kerim, met his Albanian counterpart Paskal Milo on Saturday in the Albanian border town of Peshkopi.

Mr Kerim pledged to improve conditions for Macedonia's ethnic Albanian minority.

"We will improve the right of the minorities," he said after the meeting.

"We want to carry out reforms in the social and economic spheres as well. This will be our answer to extremism."

Bolstering security

In an effort to quell unrest around Kosovo, which has been under UN and Nato control since June 1999, the Western allies agreed this week to strengthen the Nato-led peacekeepers' presence along Kosovo's southern border with Macedonia. They are also allowing Yugoslav troops to return to part of the buffer zone to curb weapons smuggling.

Recent fighting in Macedonia has been blamed partly on the ability of the guerrillas to move unhindered.

Nato in Kosovo: Fears are growing the conflict may spread

Serbian troops say they are ready to move into the buffer zone on Sunday.

Nato has until now allowed only lightly armed Serb police into the 5 kilometre-wide zone, giving local and Kosovo-based rebels freedom to establish military outposts within it.

Now Nato wants Serb forces to patrol a tiny part of the zone where it meets the Macedonian border.

Our correspondent says that it is thinly populated by Albanians, but there is still a perception that the presence of the Serbs there could lead to fresh hostility.

Shefket Musliu, leader of ethnic Albanian rebels in the area, said on Friday that his guerrillas would "fight to the last man" to keep Serb troops out of the zone.