After meeting allied ambassadors in Brussels, Mrs Albright said she expected an "activation order" for military action in the next few days unless Mr Milosevic complied fully with a UN resolution. In the strongest and most explicit public warning yet, Mrs Albright said the time for diplomacy was "all but gone".
Mr Milosevic must meet "the long-standing political, humanitarian and military demands of the international community or face the gravest of consequences".
As the brinkmanship looked set to continue, the special envoy, Richard Holbrooke, was ordered back to Serbia to convey the message that "half- measures", as Mrs Albright labelled them, were not good enough.
But his mission is also an apparent last-ditch attempt to persuade Mr Milosevic to back off and enter talks on a possible peace deal, thus averting the need for Nato air strikes.
Mrs Albright hinted at a possible deal between the Western allies and Russia on Russia's participation in a "joint" monitoring force that would patrol the ground in Kosovo and verify Serb compliance while political talks began on the future of the province.
This was apparently broached during Mr Holbrooke's talks in Belgrade as a possible concession that would help make the withdrawal of Serbian security forces from Kosovo more palatable. Russia and Serbia are traditional allies.
Mrs Albright's statement, coming after a briefing by Mr Holbrooke, who had just returned from Belgrade, reflects US pessimism about any realistic chances of a convincing agreement with the Serbs. Her statement will also make it difficult for Nato to back away from a threat of force without diminishing its credibility.
Mrs Albright also made it clear the US is prepared to act without a further UN resolution, even if this angers Moscow.
Nothing on the ground in Kosovo had "changed fundamentally", Mrs Albright said. She accused the Serbs of mounting a "televised show of soldiers leaving Kosovo". President Milosevic's "long-standing unwillingness to negotiate seriously and the accumulated barbarity of the last three months" had to be taken into account, and not just the snapshot of events in recent days.
"Time and again Milosevic has promised us to do things he had no intention of doing. Time again he has taken half-measures to avoid the consequences of his actions. Yet even in the last two weeks, even as he made cosmetic gestures in the direction of compliance, his forces committed some of the worst atrocities of the war," she said.
Nato's operational planning is intensifying, officials at Brussels headquarters said. "This is pretty serious stuff," a US diplomat said. Potential targets would be Serbia's air defences, air bases and surface-to-air missiles. "We are looking at the Baghdad scenario but on a more limited scale," a Nato official said.
Yesterday Albanian rebels fighting for Kosovo's independence declared a ceasefire, adding to the diplomatic pressure on Mr Milosevic.
A statement distributed by the Kosovo Liberation Army said the rebel command "has decided to refrain from all military activity", starting today. The statement was delivered to Albanian-language media in Kosovo's capital, Pristina.
All 16 Nato states have said they will take part in an air campaign, but there is still division about the legal basis for an attack. Mrs Albright used her talks in Brussels to try to forge consensus, arguing that there is enough authority in the existing UN resolutions.
Letters, Review, page 2Reuse content