The alliance's 19 ambassadors approved a plan that would more than double the number of Nato soldiers stationed in neighbouring Macedonia and Albania.
The force, which will include heavy armour, is being assembled with the explicit aim of escorting refugees back to Kosovo after a peace deal has been struck. However, its presence is also intended to increase the pressure on the Yugoslav President, Slobodan Milosevic, as the air campaign enters its third month.
The alliance insisted the troops will be well-armed. "It will have very sharp teeth as well as very big teeth," Jamie Shea, Nato's spokesman, said.
Washington will make 7,000 new troops available and Britain is likely to boost its contingent by at least 2,300. At the moment the UK has 6,500 troops in the region.
The deployment is expected to start next month and Nato's planners may begin identifying the number and make-up of the enlarged force this week.
Nato said yesterday that Serbian army units are digging in along the Yugoslav frontiers with Albania, Macedonia and Hungary in an attempt to deter an armed invasion.
General Wesley Clark, Nato's Supreme Allied Commander in Europe, has drawn up options for "forced entry" into Kosovo, which would require a bigger build-up in the region than 50,000, although yesterday's decision provides a start, should military and political objections recede.
Initially the so-called Kfor force was expected to number only 28,000, of whom about 16,000 are already stationed in Macedonia and 7,000 in Albania. The model for Kfor will be the Nato peace force now operating in Bosnia.
As the Serbian army prepared for a final stand against Nato, the leader of one of Yugoslavia's two republics told Tony Blair the Belgrade regime was on the point of collapse.
The Montenegrin President, Milo Djukanovic said: "Mr Milosevic is becoming aware he cannot further withstand this senseless and unequal war." He added: "People are asking themselves now, even if Milosevic is right, would being right alone warrant such enormous sacrifices?"
Mr Djukanovic urged an end to the Nato bombing but acknowledged that could happen only when a political settlement had been reached.
However, he said this could be based only on the UN resolution agreed by foreign ministers of Russia and the leading Western powers this month.
Bill Clinton's poll ratings have plunged to their lowest levels in three years because of America's unhappiness over the war. The President's approval rating has fallen from 60 per cent to 53 per cent, according to a survey by USA Today and CNN.
Despite the impeachment saga last year it has only rarely been below 60 per cent since January last year when the Monica Lewinsky affair broke.
Further reports, pages 16-18 Anne McElvoy, Review, page 3Reuse content