The removal of Vuk Draskovic shows Mr Milosevic has no intention yet of cutting a deal on Kosovo if it involves meeting Nato demands for an armed peace force in the province and the withdrawal of Serb troops and police.
Mr Draskovic was officially dismissed by the Prime Minister, Momir Bulatovic, but there is no doubt the sacking was the act of the Yugoslav President.
Mr Draskovic, a former opposition leader who later joined Mr Milosevic's government, went on television in Belgrade this week to urge Serbs to accept most of Nato's war goals. Launching an implicit attack on Mr Milosevic, he said the authorities should stop lying to Serbs about Nato's imminent collapse and the prospect of Russian military intervention.
While Belgrade at first seemed to encourage Mr Draskovic to raise the prospect of peace, Mr Milosevic was clearly angered by the way Nato took up his deputy's statements as convincing proof that Serbia and its leadership were falling apart.
Mr Draskovic's return to the opposition rids the Serbian leadership of a mercurial and unpredictable ally. But it is a risky move for Mr Milosevic. He has worked to ensure all major parties were included in his government, and thus collectively responsible for the war. Mr Draskovic will now be free to capitalise on any public disillusion.
The Yugoslav state news agency Tanjug said Mr Draskovic was sacked for making statements which were "jeopardising the respect of the federal government". Last night, Mr Draskovic's three colleagues in the 27-member government also resigned. In Washington, the State Department said the dismissal showed Mr Milosevic was an increasingly isolated figure in Serbia.
The sacking was accompanied by other gestures that suggest Belgrade is in no mood to compromise with the West.
In Kosovo, Serb forces continued the ethnic cleansing of Albanian villages, pushing another 2,000 Kosovars over the border to Macedonia and raising fears of rioting in the desperately overcrowded refugee camps. A spokesman for the United Nations High Commission for Refugees said the latest exodus had made the situation in Macedonia "very, very tense" and warned that "it has to be defused very, very quickly". The Albanian President, Rexhep Mejdani, said there was growing desperation among the 300,000 refugees in his country. He said Albania could not afford the $33m (pounds 20m) a month cost of providing for them.
Western journalists were escorted by Yugoslav authorities yesterday to a housing estate at Sudulica, which was hit in a Nato rocket attack on Tuesday night, killing at least 20 civilians. Nato said a missile had veered off course from the army barracks that was its target.
Although Serbia is determined not to capitulate to Nato, the regime appears to be searching for a way out of the conflict, with Russia's help, that will bypass the Western alliance.
Yesterday the Serbs announced they had reached an agreement on Kosovo's future government with Ibrahim Rugova, an Albanian leader whom the Serbs have kept under house arrest since the start of the conflict. In another development, the party run by Mr Milosevic's wife, Mira Markovic, predicted a Kosovo deal would be reached in days. Goran Matic, a leader of the Yugoslav United Left, said in an interview published yesterday that "this would be the week in which the basic outline of an agreement can be firmed up".Reuse content