Muslim and Croat forces seize key Serb towns

The Bosnian and Croatian armies claimed yesterday to have swept through Serb-held western Bosnia, seizing at least four important towns, sending up to 50,000 Serbs running for cover to the rebel stronghold of Banja Luka and threatening Serb gains in northern Bosnia.

Croatian forces said they had recaptured the town of Jajce, which had a pre-war population dominated by Muslims and Croats - as well as Drvar and Sipovo - while the Bosnian V Corps was reported to have attacked out of Bihac to take the town of Bosanski Petrovac. Jajce and Bosanski Petrovac lie at either end of the road to Mrkonjic Grad; were the allies to seize that, they would be within 25 miles of Banja Luka, the pride of Bosnian Serb nationhood and centre of "ethnic cleansing". The Bosnian Army is also reported to have taken Donji Vakuf, south of Jajce, after a year- long campaign.

The Bosnian Serbs denied last night that they had lost territory, their army saying "these false reports emanate from the United Nations, the Pentagon, Zagreb and Sarajevo" and were intended to destablise Serb-held areas of western Bosnia.

As the fighting intensified, Nato decided its air bombardment of the Bosnian Serbs would go on despite uneasiness at the top of the United Nations and increasing anger in Russia. The Western alliance was resolved that the Bosnian Serb commander, General Ratko Mladic, must withdraw his heavy weapons from around Sarajevo and end the siege of the city, British officials said.

The air strikes continued yesterday, their psychological impact assisting Muslim and Croat forces in their gains. The United States urged them to refrain from further advances, and also made a fresh effort to conduct negotiations between all three sides. In Belgrade, the special US envoy, Richard Holbrooke, was still in talks with President Slobodan Milosevic of Serbia early today. The US and its Western allies remain concerned to placate the Russians, whose policy is being influenced by an upsurge of nationalist outrage over the bombing of the Serbs. In Moscow, the US embassy was hit by a rocket-propelled grenade. No one was injured.

The continued bombing campaign is causing strains not only between Washington and Moscow but also between Nato and the UN. Nato officials in Brussels said they had reassured the UN that there would be no immediate escalation. Nato governments were also determined not to let the air offensive turn into a formal war against the Bosnian Serbs.

Alliance sources said Nato's Secretary-General, Willy Claes, had contacted the UN Secretary-General, Boutros Boutros-Ghali, to make clear that Nato would not expand its objectives beyond securing Sarajevo and other UN "safe areas" against attack. But in New York, arguments raged among Mr Boutros-Ghali's advisers about the UN's handling of the Yugoslav crisis since it surrendered effective control of military operations to Nato and ceded the diplomatic initiative to the US.

Russia failed to get a resolution demanding suspension of the bombing through the Security Council. But other members are also concerned about the conduct of the bombardment. A European source revealed that neither US allies nor the UN were given notice before the launch of US cruise missiles against Serb air defence systems.

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