Milosevic declared the loser and set to face Kostunica in presidential run-off

President Slobodan Milo sevic of Yugoslavia has come second in the presidential polls and will face his main rival in a run-off…

President Slobodan Milo sevic of Yugoslavia has come second in the presidential polls and will face his main rival in a run-off round of voting, the state Election Commission announced last night. The news of the major defeat for Mr Milosevic, the greatest setback he has faced in 13 years in power, came in a surprise announcement from the government-run commission. But Dr Kostunica later threw the process into turmoil by refusing to take part in the run-off with President Milosevic.

"We are talking about political fraud and blatant stealing of votes," he said in a statement. "This is an offer which must be rejected."

A Foreign Office spokesman echoed the call. He said: "Even the regime has had to acknowledge defeat. The verdict of the Serbian people is clear - Kostunica is the winner.

"But despite all the regime's intimidation and fraud we know the real result must have been even stronger against Milosevic.

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"That is the only reason the regime is seeking a second round.

"We now call on Milosevic to respect the real will of the people and proceed to a peaceful transfer of power to the democratically-elected opposition."

Earlier, the commission had said it would be tomorrow before official results would be released.

State television, citing results from the commission, said the main opposition candidate, Dr Vojislav Kostunica, secured 48.22 per cent of the vote against Mr Milosevic's 40.23 per cent support in Sunday's election.

The results were based on a preliminary tally from 10,153 of the 10,500 polling stations. Dr Kostunica's backers had feared Mr Milosevic would seek a second round of voting after realising there was no way he could reverse the outcome of the first round. The run-off must be held within 15 days of the September 24th elections.

The leaders of the Serb opposition in the UN-run province of Kosovo dismissed the announcement that a second election round would be held. "Of course it's a trick. We expected this," said Mr Oliver Ivanovic, the leader of the Serbian National Council in Kosovska Mitrovica, who backed Dr Kostunica's presidential bid.

Mr Ivanovic insisted that the announcement had been made by supporters of President Milosevic on the Yugoslav electoral commission without a full consultation with opposition representatives.

"It's not a final decision," he said, "I think everything will become clear tomorrow."

Mr Ivanovic said Dr Kostunica had won 54 per cent of the vote, and there was therefore no need to hold a second round before declaring him the winner.

Despite the anger felt by opposition supporters, no protests would be held, Mr Ivanovic said.

Gillian Sandford reports from Belgrade:

The local election results announced by an opposition spokesman, Mr Cedomir Jovanovic, gave the opposition dramatic gains across the country. Bastions of Milosevic support fell like dominoes.

Even the family's home town, Pozarevac, where Mr Milosevic grew up and where he met his wife, Ms Mira Markovic, head of the Yugoslav United Left party, went to the opposition.

Mr Mile Veljkovic, a local journalist, said: `If you have enough sweets, you get sick." He said the opposition was planning to send a sarcastic letter to the son of Mr Milosevic, Marko, saying thank you for helping to contribute to the victory.

Mr Vejkovic explained that Marko had helped because before elections and during the campaign the opposition was denied the chance to hold press conferences or rallies there and the only posters that could be put up were for Mr Milosevic.

The Socialist Party directors of the local companies - Bambi, a cake and biscuit factory, and Kolubara, a metal factory - lost their positions on the city council to production-line workers who stood against them.

Even in the federal elections, which Mr Milosevic had been confident of winning, the regime suffered a major drubbing, according to the opposition and other non-government poll scrutineers.

The opposition was ahead by 59 seats to 44 in the House of Citizens of the federal parliament, and in the House of Republics results last night showed 10 seats for the opposition and seven for the regime.

Mr Vladan Batic of the opposition alliance said it had been impossible for the regime to commit the fraud that was necessary because of the massive turnout on Sunday.