Mr Izetbegovic said he could not stay in the talks while Serbian forces continued to attack the Muslim enclave of Gorazde in eastern Bosnia.
'Gorazde is being bombarded today, and not only that, tanks are close to entering the town,' Mr Izetbegovic said as he left the villa outside Geneva where the summit, which was brokered by the international peace mediators Lord Owen and Thorvald Stoltenberg, took place. 'Because of this I cannot continue to take part.'
In spite of - or perhaps because of - the Muslim walkout, Mr Tudjman went on to announce that the Bosnian Croats and Serbs had reached a breakthrough agreement.
The two sides will carry on talks whether or not the Muslims take part, he said. The result will be maps splitting Bosnia into three ethnic mini-states.
The Serb-Croat deal appeared to mark the final burial of the Vance- Owen peace plan for Bosnia. That proposed to divide the republic into 10 ethnic provinces while preserving Bosnia as a united republic.
The new plan marks a return to earlier proposals to split Bosnia three ways.
A visibly delighted Mr Milosevic said the talks ended with 'a big step ahead . . . I would say we reached a higher level of mutual understanding than ever before.
'My impression is that the Croat side fully agrees with me on this, but the Muslim side, for the time being, still harbours some reservations, though I doubt there could be a better alternative to the one we discussed today,' he said.
The Bosnian Serb leader, Radovan Karadzic, appeared jubilant. The new agreement in effect endorses control by Serbs over most of Bosnia and the existence of a separate Bosnian Serb state.
In a gesture to assure Muslims that they were not being frozen out by the Serbo-Croat agreement, Mr Karadzic suggested that up to 40 of the 100 districts in Bosnia held by the Serbs could be set aside for the Bosnian Muslim statelet.
'Some territory of Serbs will be sacrificed for peace,' he said. 'It's difficult to say, but we will talk about thousands of square kilometres.'
Mr Tudjman said that in the new Bosnian map under negotiation the Muslims were being offered a rump state around Sarajevo and a smaller pocket of land in the north-west of the republic.
A deal cut between Serbs and Croats in Bosnia at the expense of the Muslims has looked likely for some time.
It has been hastened by a successful Muslim offensive against Croat- held towns in central Bosnia, which gathered pace today as Muslim forces overran Kakanj.
United Nations military observers finally entered the Gorazde enclave yesterday after 91 people were reported killed on what a local radio reporter called the town's 'most terrible day'.
A UN spokesman said the eight- man team of observers had seen 'considerable destruction' in the town. They reported that anti-aircraft artillery was being used in ground attacks.
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