The alliance's 19 ambassadors approved a plan to 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. "This is what I call our Teddy Roosevelt force, a force we are designing to speak softly but carry a big stick".
Washington will make 7,000 new troops available for the force and Britain is likely to boost its contingent by at least 2,300. At the moment the UK has 6,500 troops in Macedonia and Albania.
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 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. Yesterday's decision reflects the changed circumstances and the scale of the devastation that awaits a Nato peace implementation force. The model for KFOR will be the Nato peace force now operating in Bosnia. Non- Nato countries, including Ireland, are represented in the Bosnia force, as is Iceland.
As the Serbian army prepared for a final stand against Nato, the president of one of Yugoslavia's two republic's told Tony Blair the Belgrade regime was on the point of collapse.
Montenegrin president Milo Djukanovic said last night: "Mr Milosevic is becoming aware he cannot further withstand this senseless and unequal war,"
Across Serbia, the Montenegrin leader said: "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 only happen when a political settlement had been reached. However, he said this could only be based on the UN resolution agreed by foreign ministers of Russia and the leading Western powers earlier this month.
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