Nato forces in Kosovo were hunting seven escaped convicts including an international terror suspect yesterday after a violent jail-break assisted by a gang armed with rocket launchers.

Helicopters from the Nato-led KFOR (Kosovo Force) and the Kosovo Police Service had last night failed to find the group, including members of the extremist Albanian National Army, which was sprung from the supposedly high security Dubrava prison near Istok, the largest in Kosovo.

The men, whom police warned were armed, were thought to be headed for safe areas across the porous border with the Former Yugoslav Republic of Macedonia to the south-east.

The jail-break has underlined the volatile nature of life in Kosovo, where ethnic tensions still run high, while the international community bickers over the future status of the Serbian province, British officials said.

Talks on the future status of Kosovo are deadlocked after Russia refused to support a proposed United Nations resolution for autonomy for the southern Serbian province whose majority ethnic Albanians want independence and have threatened to declare it themselves if no decision is reached by a December deadline.

Among the escapees were Ramadan Shiti, a Saudi-born suspected Islamist terrorist expelled from his native country for allegedly plotting an attack on senior public figures, and Lirim Jakupi, a leader of the rebel Albanian National Army - a group of guerrillas who fight for a greater Albanian state in the Balkans. Nicknamed Commander Nazi, Jakupi was being held over the murder of a Serbian policeman and other attacks.

Shiti had been arrested in 2005 by US, Polish and Ukrainian forces acting for the UN on an international arrest warrant after an armed break-out earlier that year from a jail in Skopje, the Macedonian capital, where he was held over the murder of a taxi driver. He has also been linked with a bomb attack on a police station in Skopje in 2005.

Jakupi has been named on an EU blacklist of dangerous individuals making him subject to a travel ban.

Also in the freed group was Xhavid Morina, known as Commander Drenica, also a senior figure in the ANA and allegedly responsible for the murder of two police officers.

The attack on the prison came as the inmates were taking their exercise outside on Saturday night. While the guards were under fire the seven men, one said to be armed, jumped over a fence and a wall to escape.

Police said that they found six unused rocket launchers and shell casings from automatic rifles at the site of the gun battle. Two senior prison officials and two prison guards were arrested on suspicion of involvement and no injuries were reported.

A spokesman for the Foreign and Commonwealth Office rejected suggestions that the break-out would disrupt further the international search for a solution to Kosovo’s status but said that the incident showed the urgency of progress to end the impasse over its future.

He added: “I do not think it is a sign of disruption but it does underline what the United Nations’ own report said back in 2005 that the status quo in Kosovo is unsustainable. There are provisional institutions of self governance but Kosovo needs to make progress. Resolving the status of Kosovo is the key to the economic issues and law and order issues.” The UN and Nato have been overseeing Kosovo since 1999 following the downfall of the Yugoslav regime of Slobodan Milosevic.

After the latest attempt at a UN resolution failed earlier this summer, negotiators reconvened for 120 days of extra talks to re-open all possible solutions. Wolfgang Ischinger, the EU representative to the talks, caused controversy earlier this month by appearing to suggest that the province could be partitioned along ethnic lines if that was acceptable to both sides, with the north staying with Serbia and independence for the south. He later clarified his remarks saying that he did not support partition.

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