The federal government decided unanimously... to co-operate fully with the tribunal

Foreign Minister Goran Svilanovic

But Mr Powell said the US would not make a ruling on the issue for the time being.

The handing over of suspects is a key condition for Yugoslavia to receive promised US aid worth about $40m during 2002.

New handovers

Last week the Serbian Government adopted a new decree on arresting war crimes suspects although Yugoslav President Vojislav Kostunica remains opposed to co-operation with the court.

Now the authorities say they will act to deliver suspects to The Hague.

"The federal government decided unanimously... to co-operate fully with the tribunal and to demand all state organs to also co-operate fully," said Foreign Minister Goran Svilanovic.

Mr Djindjic orchestrated Milosevic's extradition

Asked if the move meant new handovers, he said: "Yes, I think that after such a decision all state bodies are obliged to co-operate with The Hague, which means...to arrest those accused of war crimes and transfer them to The Hague".

Another key concession was allowing international access to the government archives. That is expected to strengthen the case against former Yugoslav President Slobodan Milosevic, who is currently on trial in The Hague on charges including genocide.

World funds

But there is more at stake than US congressional aid, according to the BBC's Alix Kroeger.

Yugoslav President Kostunica has been highly critical of the tribunal

Last week, Yugoslavia agreed a three-year deal with the International Monetary Fund worth some $800m. For that money to come through, Yugoslavia will need strong support from the Americans.

And that support will only come if Yugoslavia shows real co-operation with the war crimes tribunal, our correspondent reports.

The issue of extraditions has once again brought to the fore the power struggle between Serbian Prime Minister Zoran Djindjic and President Kostunica.

Mr Kostunica - who has declared the tribunal illegal and anti-Serb - came under intense pressure from political rivals after his refusal to authorise the surrender of war crimes suspects prompted the US aid freeze.

Serbia's Government accused him of risking the country's return to the "isolation and misery" of the Milosevic years.