Serbian President Slobodan Milosevic yesterday invited Prime Minister Andreas Papandreou to consider a longstanding Serbian proposal to form a loose Balkan confederation between Athens-Belgrade-Skopje.

"The future of this region depends on the development of good relations between Athens, Skopje and Belgrade," Mr. Milosevic said.

Mr. Papandreou said he told Mr. Milosevic the idea was "a pioneering, interesting proposal" but that it had not yet been examined.

Mr. Milosevic arrived yesterday for a one-day working visit.

Mr. Papandreou said that the Serbian president "offered some interesting thoughts" on the issue of the Former Yugoslav Republic of Macedonia.

The Greek premier said that he had discussed a wide range of issues with Mr. Milosevic concerning prospects for peace in the Balkans. "At the present time, President Milosevic is playing the most important role in efforts for peace in the region. This is not only my view but also the view of the twelve EU member states," Mr. Papandreou said.

Mr. Milosevic said that Serbia would do everything possible to "quickly settle issues still open to the benefit of all sides for the normalisation of relations in our region". He thanked Mr. Papandreou, the Greek government and people for their "considerable support and assistance during this deep crisis". "With its stance, Greece has helped correct the distorted picture which many had of us, of Yugoslavia, and helped the whole world understand events in their true dimension," he said.

Mr. Milosevic said that Serbia and Greece had "almost identical" or "very similar" views on all the main issues concerning the region.

Replying to questions, Mr. Papandreou reiterated Greece's position that any withdrawal of UN peacekeeping troops from Bosnia at the present time would be "an irresponsible act which would open the way for a massacre (in Bosnia) and a spread of the conflict".

Mr. Papandreou said he was concerned that "certain countries were preparing for the possibility of withdrawal".

Mr. Milosevic also met with main opposition New Democracy party leader Miltiades Evert on developments in the region, the Bosnia crisis, the Greek-Skopje dispute and the loose confederation proposal.

Following the meeting, Mr. Evert told the press his party "be it in office or in opposition, always employs all possible means to find peaceful settlements to these problems."

Mr. Evert stressed that "irrespective of the party in office, Greece will always work in this direction."

On the Skopje issue, Mr. Evert said the dispute was mediated by the United Nations and Greece would "listen carefully to every useful observation."

On Mr. Milosevic's proposal for a confederation, the ND leader said that all Balkan countries should instead gain accession to the European Union.

Former prime minister and honorary ND president Constantine Mitsotakis said he supported Mr. Milosevic's efforts to find a peaceful settlement.

He said he had extensive talks with the Serbian president on the entire spectrum of Balkan-related issues.

After meeting with Mr. Milosevic, Political Spring party leader Antonis Samaras said the Serbian leader's proposal "is interesting but should be thoroughly examined."

Communist Party of Greece Secretary-General Aleka Papariga said her party was in favour of inter-Balkan cooperation in the economic, cultural, trade and political sectors.