Most of the 70,000 residents huddled in shelters as the fighting raged less than 500 yards from Bihac hospital and moved closer to the headquarters of the Bosnian Fifth Corps. ''They seem almost paralysed with fear,'' said a UN official.
Bihac has a pivotal role in the Bosnian conflict. If the UN fails to act and its peace-keepers are asked to withdraw, there is a danger that Sarajevo will return to all-out war. Last night, the Security Council had failed to reach agreement on a draft statement that would condemn the Serbs' shelling of and entry into Bihac and call for their withdrawal.
If Bihac falls, it will also exacerbate the rift in Nato, with Europeans and Americans at each other's throats again. The US plan to relieve the city was unceremoniously rejected by France and Britain last week, and sent back to the UN.
Bosnian Serb forces first set a deadline of 1900GMT yesterday for the town's defenders to surrender. They later amended this with a new offer for Bosnian Muslim troops to surrender to Fikret Abdic's forces today. Mr Abdic is a local Muslim businessman who led a 10-month revolt against the Bosnian government.
But the mayor of Bihac, Hamdija Kabiljagic, said surrender was out of the question: it would be the signal for mass slaughter by the Serbs. Speaking by telephone yesterday, the mayor said Serb forces were advancing through the town's suburbs and he appealed for UN intervention to prevent a ''certain massacre'' when the Serbs reach the centre today. People were barricading the streets with trees and burned out cars.
Asked about the 1,200 Bangladeshi UN troops sent to protect Bihac, the mayor said they were sheltering in their base, without food or ammunition. ''It is a shame on the UN,'' he said. ''We have to protect and feed Bangladeshis sent to protect us.'' The UN played down yesterday's fighting around Bihac. ''In military terms this is a firefight,'' said a spokesman in Sarajevo. ''If you were in the hospital you would hear it and feel it and you might perhaps think you were in the middle of it.'' The 700-bed hospital now houses 1,600 war-wounded, according to the mayor.
Diplomatic efforts to halt the fighting continued. The UN has proposed a three-day cease-fire in Bihac, but Radovan Karadzic, the Bosnian Serb leader, did not appear to be in a conciliatory mood, warning Washington it risked ''another Vietnam''.
Britain, too, was under attack for its stance. Safet Curtovic, a Bosnian Muslim reporter inside Bihac, said by telephone yesterday that the townspeople were especially angry at the British government, which they see as blocking decisive action to stop the Serb advance. ''People are embittered at the international community, especially the English,'' he said.
In London, the former Conservative defence secretary Sir John Nott launched an extraordinary attack on the Government and personally on the Foreign Secretary, Douglas Hurd, calling on Britain to back a US demand for strong action against the Serbs.
''The British, principal appeasers in this thing led by Douglas Hurd and the Foreign Office, should detach ourselves from the French and Russians and try to get back together with the Americans and come to some serious Anglo-American solution to this problem,'' he told BBC radio.
''Only the US has the military strength and the moral conscience to act. This rift between the British and Americans is a catastrophe for Europe and the world.''
Two British Tornado jets were reported to have been fired on with a ground-to-air missile over Serb positions. The missile exploded in mid-air but the planes, based in Bari, Italy, were undamaged.
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