The main parties in Macedonia have agreed to form a grand coalition government of national unity including all main ethnic Albanian and Slav parties, the Prime Minister, Mr Ljubco Georgievski, said early today.
The announcement seemed to avert the declaration today of a state of war.
"The great percentage of the deal is done. I am optimistic that we will form a grand coalition tomorrow. There is some fine tuning to be done," he told local reporters after marathon talks which included the European Union security affairs chief, Mr Javier Solana.
He said that two main opposition parties - the Slav-dominated Socialists and the ethnic Albanian Party for Democratic Prosperity - would join the government, which currently comprises three parties, including the main Albanian DPA grouping.
Mr Georgievski said the idea of imposing a state of war was off the agenda for now because "Macedonian security forces conducted a successful operation today".
The army has been shelling ethnic Albanian rebel positions in two northeastern villages for the past five days to dislodge rebel forces.
The decision to shelve the issue, which threatened to wreck the coalition between Macedonian Slavs and ethnic Albanians, appears to have been influenced by the EU and NATO, which in top-level talks both counselled against a declaration.
Earlier the United States expressed its support for Macedonia's stepped-up fight against ethnic the Albanian rebels but warned Skopje against the drastic step of declaring a state of war. President Bush "supports the efforts of the government of Macedonia to fight the extremists who have brought the violence to the region," his spokesman, Mr Ari Fleischer, said. Mr last week welcomed Macedonia's President Boris Trajkovski to the White House and "made clear. . . that he believed that the ultimate solution would be a political solution," said Mr Fleischer.
Bush remains "very concerned" about an ethnic Albanian rebellion and "wants to make certain that Macedonia is able to take the action it needs to combat a problem that has been created by the extremists," Mr Fleischer said.
These comments were made shortly after Macedonian army tanks, artillery and helicopter gunships stepped up a bombardment of ethnic Albanian guerrilla positions in hills just 25 km north of Skopje.
NATO's Secretary General, Lord Robertson, had warned that Macedonia was "on the brink of real trouble" as it struggled to crush the ethnic Albanian rebels, denounced by Lord Robertson as "a bunch of murderers".
He had just met President Trajkovski, Mr Georgievski, and leaders of political parties. "There must be a support for a grand coalition, a united front against violence," he stressed.
The head of the only ethnic Albanian party in the centre-right coalition, Mr Arben Xhaferi, had warned that his Democratic Party of Albanians would quit the government if Mr Georgievski went ahead and declared a state of war.
Meanwhile hundreds of ethnic Albanian refugees crossed into Kosovo from Macedonia yesterday, painting a bleak picture of life in Macedonia.