Russia's special envoy, Mr Viktor Chernomyrdin, claimed last night to have taken a major stride towards peace in the Balkans after Yugoslavia agreed that the Kosovo crisis could be resolved on the basis of principles agreed between the western powers and Russia.
But President Slobodan Milosovic insisted after seven hours of talks with the Russian envoy in Belgrade that Yugoslavia must take part in the shaping of any agreement on the future of Kosovo.
Diplomats from the G8, made up of the world's leading industrialised nations and Russia, met in Bonn yesterday to draft a possible United Nations Security Council resolution on Kosovo amid growing optimism in Germany that a peace deal is imminent.
Visiting NATO headquarters in Brussels yesterday, Chancellor Gerhard Schroder expressed confidence that a political solution to the Kosovo conflict was drawing closer and repeated his opposition to the use of ground troops.
"You know the situation in Germany. Neither the opposition nor the government wants to send combat troops to Yugoslavia. We have always taken this position. We see no reason to change it now. It is becoming clear now that the military and political strategy is starting to work. And we should pursue it further," he said.
NATO and Yugoslavia remain far apart on a number of key issues but western diplomats say that the broad outlines of a peace settlement are now clear.
NATO would stop bombing Yugoslavia for seven days to allow Mr Milosovic to withdraw most of his forces from Kosovo. The province would then be occupied by a force of 50,000 soldiers comprised of US, British, French and Russian troops. The Scandinavian countries may also contribute to the force, along with Orthodox Christian nations such as Greece and at least one Muslim country.
It is not yet clear whether the mission, which would not be subject to a time limit, would be led by NATO, the UN or another body. The US is believed to insist on a British commander while Russia is demanding that a Finnish UN officer should be in command.
Like Berlin during the Cold War, Kosovo would be divided into several sectors controlled by the major powers, with the Russians controlling the north, where the industrial and religious sites valued by Serbia are located.
NATO would recognise Yugoslavia's sovereign borders and pledge that the people of Kosovo will not be allowed to vote for independence from Belgrade.
Mr Schroder yesterday ruled out a halt to NATO's bombing campaign before Yugoslavia agrees to withdraw its forces from Kosovo. But he dismissed the suggestion that NATO may have to invade Kosovo with ground troops in order to avoid losing the campaign against Yugoslavia.
"Don't worry. I won't be drawn into this particularly British theoretical debate on war strategy," he said.
Sharp divisions have emerged in recent days between Britain, which favours the deployment of ground forces and Germany, where public opinion is pressing for an early diplomatic settlement to the Kosovo conflict. Mr Schroder's coalition allies in the Greens last week passed a resolution ruling out the use of ground forces and calling for a temporary halt to the bombing of Yugoslavia.
In an interview to be published in today's edition of the magazine Stern, the Greens' parliamentary leader, Mr Rezzo Schlauch, warns the chancellor that the environmentalist party will press for the government to back a temporary halt to the bombing.
"The government cannot just walk away from our resolution," he said.
Mr Schroder's enthusiasm for a swift diplomatic settlement to the conflict is driven not only by domestic political pressures but by an eagerness to prove his leadership credentials during Germany's six-month presidency of the EU.
On that occasion, the chancellor's critics complained that, in his enthusiasm to strike a deal, he had squandered an opportunity to get Europe's finances in order. As Mr Schroder cranks up the pressure on his NATO partners to accept a peace deal in Kosovo, similar fears are surfacing.
After two months of bombing, NATO is poised to accept a deal that would leave Mr Milosovic in power and deny the people of Kosovo the right to national self-determination.
Most of Mr Schroder's government colleagues would welcome such a deal as a means of ending a military campaign that has gone awry but none are pretending that this outcome would represent a victory for the West - or for the long-suffering population of Kosovo.