A spokesman for the Secretary-General said in a statement that Mr. Annan was particularly alarmed "that the recent deterioration has resulted in the displacement of civilians in the area."

At the same time, Mr. Annan was encouraged, "by the fact that a NATO political and military mission is visiting Skopje today to assess the situation on the ground, and that KFOR has stepped up patrols and enhanced monitoring the border between Kosovo and the FYROM," the statement said.

The Secretary-General called on all the parties to exercise restraint and reiterated his conviction that the situation must be resolved by political means.

Meanwhile, the UN High Commissioner for Refugees (UNHCR) reported today that the number of ethnic Albanians fleeing to Kosovo from a mountain village in neighbouring Former Yugoslav Republic of Macedonia had risen to over 500 -- an increase of 200 since Monday.

UNHCR spokeswoman Astrid van Genderen Stort told reporters in Pristina that the latest group of arrivals had fled following an intensive firefight on Tuesday around the mountain village of Tanushevci. The refugees cited the increased tension and build-up of forces in the area as another reason for their flight.

"Finally we can welcome back many of those who were held for too long in prison," said Gary Matthews, UNMIK Principal Deputy Special Representative. "With their return, a significant step will be taken towards healing some of the wounds of war."

However, Mr. Matthews noted that the head of UNMIK, Hans Haekkerup, currently attending meetings in Brussels, had demanded the return of all prisoners held in the Federal Republic of Yugoslavia to Kosovo, where they would undergo judicial review by UNMIK.

UNMIK, Mr. Matthews said, took note of reports of statements made by Yugoslav Justice Minister Momcilo Grubac to Parliament, in which the Minister reportedly indicated that the 143 Djakovica residents held on terrorism charges could be released soon.

Mr. Matthews called on Yugoslav President Vojslav Kostunica to free the Djakovica group, and to return all others who are detained as soon as possible.

In a related development, the UN High Commissioner for Refugees (UNHCR) has urged the European Union (EU) to deploy "an adequately staffed observer mission" in southern Serbia's predominantly Albanian-populated Presevo area, to help contain mounting tension between ethnic Albanians and Serbs.

A UNHCR spokesman said today that the agency head, Ruud Lubbers, had addressed letters to Swedish Foreign Minister Anna Lindh (whose country holds the EU's rotating presidency) and Javier Solana (the EU's High Representative for the Common Foreign and Security Policy). The letters, which were forwarded to the EU leaders last Friday, drew attention to the plight of civilians uprooted by a conflict between Yugoslav security forces and armed Albanian militants.

"If the violence continues to escalate, UNHCR's efforts to create conditions for people to return home in southern Serbia and in Kosovo will be impeded and further displacement will undoubtedly result," Mr. Lubbers warned, adding that the conflict might spread and engulf other areas.

The last arrivals were yesterday, mainly in the village of the Debelde and Vitina area, Astrid van Genderen Stort, a spokeswoman for the UN High Commissioner for Refugees (UNHCR), told reporters in Pristina. Of the 309 new arrivals since last week, more than 100 arrived yesterday.

The refugees told UNHCR that they had fled following the killing of a young man in mid-February. But they also reported rising tensions in the border area, with an increase of forces of the former Yugoslav Republic of Macedonia as well as some shootings near the village of Tanufhevci. There was no independent confirmation of these reports, according to a UN spokesman.

In this connection, the international force (KFOR) has increased its ground patrolling and its surveillance of the border, a KFOR spokesman told reporters in Pristina.

UNMIK head Hans Haekkerup will then meet with the European Union General Affairs Council in Brussels on 26 February, with the North Atlantic Council in Brussels on 28 February and with the Permanent Council of the Organization for Security and Cooperation in Europe (OSCE) in Vienna on 1 March, UNMIK spokeswoman Susan Manuel also said.

In Brussels and Vienna, Mr. Haekkerup will brief members on his first six weeks in Kosovo. Discussions will focus on the way ahead and the work programme of UNMIK, with emphasis on the establishment of a legal framework for elections. Mr. Haekkerup is expected to ask for OSCE support in specific areas, such as election preparation.

In preparing for these meetings, Mr. Haekkerup elicited the views of the local Kosovo leadership, Ms. Manuel said.

In this second, much larger phase, 400,000 ID cards are being produced and distributed until May for those who registered last summer. Some 35,000 cards have been made available in the first phase, which began in mid-December.

About 21,000 ID cards are now available from post offices in 12 municipalities, and 10,000 are printed every day. The information gathered from the ID card will form the basis of the civil registry, which will manage items ranging from travel documents to a comprehensive voter list. The UNMIK travel document has so far been recognized by 16 European countries and the United States.

In the final phase, starting in May, the remaining 600,000 ID cards will be issued, to those registering in the exercise that started last November.

SRSG Haekkerup visiting patients injured in bus attack near Podujevo.

"This is a terrible tragedy, not only for the victims but for all the people of Kosovo," the IAC said in a statement issued in Pristina. "The international community has judged this tragedy and other attacks in recent days very harshly."

Terming the attack "terrorist" and "cowardly", the IAC called for "an immediate end to extremist acts that jeopardize the future of Kosovo."

Ten people were killed and dozens more were seriously injured in Merdare when the first of a convoy of buses crossed a culvert packed with explosives, which were detonated by a command wire.

Remains of bombed bus near Podujevo, Kosovo

According to a report from the UN Interim Administration Mission in Kosovo (UNMIK), the first bus in the convoy at Merdare crossed a culvert packed with explosives, which was detonated by a command wire. The attack occurred just after the buses entered Kosovo from Serbia.

In a statement to the press, Council members expressed their shock and called for an immediate investigation to bring the perpetrators to justice. "This latest tragedy follows a recent upsurge in violence in Kosovo which is totally unacceptable and must be reversed," the Council said, calling on all inhabitants of Kosovo to stand against the violence of extremists working against peace and stability, and on Kosovo political leaders to contribute to the stability of the situation.

The Council statement was delivered to the press by Council President Saïd Ben Mustapha of Tunisia, which holds the UN body's rotating presidency this month.

The attack was equally condemned, "in the strongest terms possible," by UNMIK chief Hans Haekkerup. "It is a terrible tragedy, not only for the victims and their families, but for all the people of Kosovo," he said in a statement issued in Pristina. "Those who believe that such a contemptible act might in some way advance the political aspirations of small, extremist and marginalized sectors of Kosovo's society are seriously mistaken."

In a separate development, the Secretary-General today appointed Gary L. Matthews of the United States as Principal Deputy Special Representative in Kosovo, replacing Jock Covey, also of the United States.

Announcing the appointment, a UN spokesman said Mr. Matthews was most recently Deputy High Representative in Bosnia and Herzegovina and Supervisor for Brcko. Before that, he was Regional Director in the Bosnian town of Mostar for the Organization for Security and Cooperation in Europe (OSCE). Mr. Matthews is a retired ambassador who served in the US Foreign Service for 30 years.

"We demand extremists to cease these attacks as they only serve to damage the prospect for stability and democracy," the KTC said in a statement. "We deplore any form of interethnic hostility which has caused a renewal of violent incidents."

Speaking to reporters today in Pristina, a spokesperson for the UN Interim Administration Mission in Kosovo (UNMIK) said one Kosovar Serb man was killed and two others injured when their convoy was ambushed by a sniper outside Strpce, according to the latest information available to the UN mission. The convoy was returning from Serbia, accompanied by Polish and Ukrainian elements of the international force (KFOR), spokesperson Susan Manuel said.

In addition, four young Kosovar Serbs from the same family were injured when their tractor hit a land mine near Zubin Potok yesterday, Ms. Manuel said. In Klokot, a Kosovo Serb farmer was shot in the leg while tending cattle.

"The suspicion is that there could be some sort of organization, due to the number of incidents all on one day and the fact that we had a period of relative absence of violence," Ms. Manuel said.

For the KTC, these and other attacks carried out on Kosovo Serbs and their property are "indications that an unacceptable level of violence continues to plague Kosovo." The Council reaffirmed its commitment to the freedom of movement of all residents.

Briefing the Council on the next phase of the UN Interim Administration in Kosovo (UNMIK), Under-Secretary-General for Peacekeeping Operations, Jean-Marie Guéhenno said that while there had been progress in the establishment of the Municipal Assemblies following last October's municipal elections, it would take eight months to prepare for province-wide elections.

Elections were among the main priorities for future work of UNMIK, he said, which included a legal framework for provisional self-government; an effective law enforcement and judicial system; regular dialogue with the Federal Republic of Yugoslavia; and resolution of legal property issues. Currently, UNMIK was elaborating the key principles, which would serve as the foundation for future discussions on the legal framework for elections and provisional self-government.

That "complex exercise" should not be rushed, Mr. Guéhenno said, as "hasty decisions may set the mission on a course from which it is difficult to deviate."

The democratic changes in the Federal Republic of Yugoslavia provided an opportunity for a more constructive and meaningful relationship with Belgrade, Mr. Guéhenno said, adding that the establishment of an UNMIK Belgrade Office had been agreed in principle, and that negotiations continued on detainees and missing persons from Kosovo.

In the ensuing debate, most speakers agreed that it was essential to define the mandate and composition of a Kosovo-wide Assembly prior to the election and to ensure participation of all ethnic groups. Speakers also expressed concern about recent violence in Mitrovica, condemning attacks on international personnel there. Another area of concern was the Presevo Valley in southern Serbia, the theatre of activities of ethnic Albanian fighters, which was important for the overall security of the region.

The UN Mission said that Leme Xhema was selected out of five candidates who had applied for the post. The selection process was conducted by an international management consulting firm, with the assistance of observers from PTK and UNMIK.

The candidates participated in an "assessment centre" during which their reactions, strengths and weaknesses under stress were tested. During the interviews, special attention was paid to the candidates' leadership, social competence and stress management skills.

According to an UNMIK statement, Mrs. Xhema listed as her major goals "the creation of a working atmosphere within PTK that will help the employees heal the deep wounds of war and restore a non-discriminatory approach to PTK customers," as well as increasing services, efficiency and profitability. She had previously served for 17 years as a finance manager in a large corporation.

In another development, the Kosovo Transitional Council discussed the situation in Mitrovica and Presevo Valley, with many members expressing support for the Joint Declaration signed on 1 February by UNMIK, the KFOR international security force and Kosovo Albanian leaders. The Declaration, aimed at restoring peace in the divided city of Mitrovica, was issued following days of violence between the Albanian and Serb communities.

Hans Haekkerup, who heads the UN Mission, told the press after the meeting that UNMIK and KFOR were determined to protect communities on both sides of Mitrovica, but it was "very important that the Kosovo Serbs or relevant representatives of the Kosovo Serbs are behind what we are doing." Additional UNMIK Police, KFOR and local police officers had been deployed, he said, and discussions with representatives of the Kosovo Serb community were aiming at a political solution of the tensions in Mitrovica.

A three-and-a-half-year sentence was imposed on a Kosovo Albanian male -- the first defendant in a trial under way in Pec in which three men were charged with trafficking in women and controlling them for the purpose of prostitution, said Derek Chappell, a spokesman for the UN Interim Administration Mission in Kosovo (UNMIK).

"This verdict sends a strong message to those who would buy and sell human beings for profit: that the courts will support the police with strong sanctions," he said, adding that the trial saw the first use of new regulations signed into law shortly before the departure of the former head of UNMIK, Dr. Bernard Kouchner.

Under the regulations, any property used for trafficking purposes -- such as vehicles -- can be seized by the police and then sold to support a fund to repatriate the victims.

Meanwhile, in north Mitrovica, the Kosovo police entered an apartment and rescued three young Moldovan women who were being held against their will, the spokesman said. The women, smuggled from Serbia, expressed a desire to return to their home country.

The spokesman also reported a growing drug use in Kosovo. The latest incident occurred yesterday in Prize, where UNMIK police entered a house and found three people under the influence of narcotics. A Kosovo Albanian male was arrested after a search in the house discovered 10 grams of heroin, packaging supplies and an undisclosed amount of cash.

The incident came shortly after the seizure of 65 bags of heroin near Pristina two weeks ago and continuing seizure of drugs in the Gnjilane area, the spokesman said. The heightened profile of domestic drug abuse, he said, was a reflection of the UN police being able to focus on local problems, coupled with a greater willingness by local people to report crimes to the UNMIK and Kosovo police.

Susan Manual told reporters in Pristina that riots had continued yesterday in southern Mitrovica, where two Kosovo police officers were slightly injured by stun grenades.

She expressed hope that a declaration signed yesterday by Kosovo Albanian leaders would work to restore calm in the city. The text, also endorsed by UNMIK chief Hans Haekkerup and KFOR Commander General Carlo Cabigiosu, warned that "unless the security situation in Mitrovica stabilizes, it will be impossible to address longer-term issues involving the future viability and integration of the city."

Meanwhile, a spokesperson for the UN High Commissioner for Refugees (UNHCR) today expressed concern about the "extremely worrying situation" facing minorities in both the northern (largely Serb) and southern (largely Albanian) parts of the city, and urged both parties to exercise restraint.

"The fact that the anger of the crowds has over the past days been directed against UN peacekeepers can only be seen as a deterioration of the situation and a very worrying development," said Astrid van Genderen Stort.

She said the agency, which pulled its staff out of southern Mitrovica following this week's violence, would reassess the security situation over the weekend to determine when they could return.

The Kosovo Albanian leaders issued their declaration following a two-hour meeting in Mitrovica with the head of the UN Interim Administration Mission (UNMIK), Hans Haekkerup, and the KFOR Commander, General Carlo Cabigiosu. Recognizing that the situation in Mitrovica posed a significant threat to a safe and secure environment, they called on all citizens to remain calm and to refrain from further acts of violence.

The declaration also deplored violence directed at KFOR, which resulted in numerous injuries to soldiers "who are here to provide for a secure environment." It also expressed concern about potential attacks against international civilian representatives.

The assembled leaders called for additional security forces to be deployed in Mitrovica, including KFOR troops, UN police and local police. They also urged greater freedom of movement for all residents, the return of displaced families to their homes, and the establishment of functioning political structures.

According to the declaration, the violence started as a result of the killing of a 15-year-old Kosovo Albanian boy, and led to other serious injuries, including to KFOR soldiers. A UN spokesman described the situation in Mitrovica as tense but calm, with KFOR troops patrolling and keeping crowds of Albanians from crossing the bridges across the Ibar River, which separates the Albanian and Serb communities.

On Wednesday, a total of 21 KFOR peacekeepers were injured, one of them seriously, in three separate incidents involving stones and grenades.