Karadzic could be in remote eastern Bosnia

Orders were issued for the assets of businessman Momcilo Mandic and politician Milovan Bjelica, to be frozen, while peacekeepers seized documents from their offices.

The international community's High Representative in Bosnia, Paddy Ashdown, said Mr Mandic was the financial head of Mr Karadzic's support network, while Mr Bjelica was his communications link with the outside world.

I warned people - if you are helping Radovan Karadzic, life is about to get tougher, and today it has Paddy Ashdown

"If you want to kill this poisonous tree, you need to go after its roots," Mr Ashdown said.

"I warned people: if you are helping Radovan Karadzic, life is about to get tougher. And today it has."

The BBC's Nick Hawton in Sarajevo says that while this is not the first such action against Mr Karadzic's supporters, its scale appears to show a new determination to catch him.

Action by banks

Mr Karadzic and the former Bosnian Serb military commander, Ratko Mladic, are the international war crimes tribunal's most wanted fugitives.

They are accused of genocide, war crimes and crimes against humanity for the persecution of non-Serbs in Bosnia.

A statement by the Nato-led peacekeeping force, S-For, said the aim was to tighten the net around Mr Karadzic and other accused.

Bjelica has been removed from his post in Pale

One of Mr Ashdown's senior officials met directors of leading banks in the Bosnian Serb republic to specify actions the banks would be obliged to take.

The US ambassador in Bosnia, Clifford Bond, said Washington had frozen the assets of both men, as well as those of two companies associated with them - Manco Oil and Privredna Banka Srpsko Sarajevo.

He added that Washington was urging European countries to do the same.

Mr Ashdown also stripped Mr Bjelica of his post as chairman of Pale municipal assembly.

'International embarrassment'

Those indicted war criminals that remain at large have no permanent hiding place S-For statement

Several unsuccessful attempts have been made by peacekeepers to capture Mr Karadzic, who is thought to be hiding in remote eastern Bosnia or in his native Montenegro.

The chief prosecutor of the international war crimes tribunal, Carla del Ponte, has described the fact that he is still at large as an "international embarrassment".

But S-For said the latest moves would bring arrest of the fugitives closer.

"Those indicted war criminals that remain at large have no permanent hiding place," it said in a statement.