Jakup Krasniqi, a KLA spokesman, said: "The formation of the government is of urgent necessity at a time when all political and governing structures have collapsed."
He added that the government was formed inside Kosovo and that all of its members, including Mr Thaci, were still there. Others believe the government is, in fact, based in Tirana, and that the KLA leaders are all now in Albania.
Western diplomats and KLA sources say the organisation faces annihilation inside Kosovo, after being reduced to a handful of pockets surrounded by Serb forces. The "ethnic cleansing" of western Kosovo clearly formed part of Belgrade's strategy of severing supply lines to the rebels from Albania proper.
KLA sources have complained bitterly that Nato has ignored their pleas for weapons-drops inside Kosovo and has not targeted Serb tank columns moving around the province in broad daylight.
The surviving KLA pockets are mostly located west and north of the Kosovo capital, Pristina, in the Drenica region, well away from the supply trails. In Albania, the KLA is trying to recruit troops to continue the struggle, but is reluctant to expose the host country to Serb military reprisals by operating too publicly.
At the border town of Kukes, few KLA soldiers are visible, but at Kruma, 18 miles away, hundreds of uniformed but unarmed KLA soldiers could be seen yesterday in the streets, waiting to go into battle.
Few wish to discuss their strategy, if there is one, with outsiders. A captain, who refused to be identified, said: "It will be a long war. We always knew that. But we will win. Throughout history, it has been shown that you cannot defeat an entire people.
"We certainly want support from the Americans, but if we don't get it, we will still fight alone," he replied.
As he talked, half a dozen men came up to announce their readiness to join up, including Fehim Musa, 21, a bus driver. "I have never even touched a gun," he said. "But I will learn. I want to defend my nation."
The captain said the KLA was giving recruits two months' training. It was also breaking with Albanian society's conservative instincts by recruiting women. "My 19-year-old daughter will fight," he said.
Kosovo's new government in exile contains six KLA representatives, in control of all the key posts, including finance, public order and defence. Only one post, that of deputy prime minister, was left for supporters of Ibrahim Rugova, the discredited Kosovo leader who was captured by the Serbs at the start of Nato action and who has been paraded twice on Serbian television.
Mr Krasniqi said: "The LDK [Rugova's party] is currently inactive. Most of their leaders have left Kosovo or, as in Rugova's case, have been captured by the Serb forces. The LDK is... no longer a player."
The new government is demanding control of the funds collected by the former prime minister-in-exile, Bujar Bukoshi, over the past 10 years. Since 1991, when Mr Rugova's party formed an underground government for Kosovo, it has financed itself via a levy on Kosovo Albanians abroad. Every Kosovo Albanian was expected to donate 3 per cent of his or her income to finance the government, and about $300m (pounds 190m) was raised, much of which remains under Mr Bukoshi's control.
Following the outbreak of large-scale fighting, the KLA set up its own fund, The Homeland Calls. Since then, the money from the diaspora has been re-routed to the KLA.Reuse content