The Kosovo Liberation Army will not disarm, but only scale down its forces, officials said following high-level talks with NATO yesterday.
NATO is hoping that weekend talks will yield an agreement that the ethnic Albanian rebels will give up their weapons, easing the fears of new war in the province.
The British Prime Minister, Mr Tony Blair, said yesterday at the G8 summit in Cologne: "I hope by the end of the day we will have a comprehensive agreement on the demilitarisation of the KLA and the handing in of weapons."
But the KLA say they interpret this as allowing them to remain as an army, albeit scaled down. "It is demilitarisation, not disarmament," said KLA spokesman Mr Pleurat Sejdiu in London. "Some units will be dissolved, some units will be transferred - to police, to military."
While some units will disband, the ethnic Albanian rebels hope to secure permission for others to remain in being and get NATO training, a similar arrangement to that operating in Bosnia where Muslim and Croat forces, but not Serb units, get NATO assistance. The KLA also hopes soldiers will be transferred to an embryonic Kosovo police force.
Talks about disarmament went on over the weekend in the Albanian capital, Tirana, between the KLA and British Gen John Reith, head of NATO forces in Albania.
Mr Sejdiu said that one major NATO headache - the presence of KLA units inside Kosovan towns - would be ended, with units withdrawing to rural areas. He claimed NATO had already agreed to allowing a smaller KLA to remain.
The KLA was first formed in 1993, purely on paper, as the fighting arm of the ethnic Albanian emigre group, the Popular League of Kosovo.
They remained in the shadows of the independence struggle by Kosovo Albanians, which was led by Mr Ibrahim Rugova who insisted on passive resistance to Serbian rule. But the failure of this approach to yield results, plus the availability of weapons after the crumbling of authority in neighbouring Albania, saw the KLA send formed units into action in late 1997.
Last year, following massacres by Serb forces of civilians in the central Drenica region of the province, the KLA became a mass movement, with many units working outside the control of the founders.
The West is probably fanciful in thinking the KLA, which has grown in less than two years from a handful of guerrillas to a 30,000-strong force, will dissolve.
For one thing, Kosovars see the force as their best long-term guarantee that Yugoslav forces will not again ethnically cleanse the province.
They remember how the United Nations failed to keep promises made to Bosnia's Muslims to defend them in the safe area of Srebrenica, which was overrun in 1995 by Bosnian Serb forces, leading to more than 5,000 Muslim men being slaughtered.
For another, KLA leaders feel they have done more than most to liberate the province, and do not want to see political power monopolised by the previous ethnic Albanian leader, Mr Rugova.
At present, KLA units are pouring out of the hills. In northern Kosovo, British and Canadian troops at Podujevo are preparing for the arrival of 2,000 soldiers who have spent the year fighting against Serb forces from Mount Shalia.
NATO commanders here say they have told the KLA not to display weapons in public, though they allow units to remain in being. One is camped adjacent to a NATO base at Gornja Zakut.
In practice, disarming the KLA will be impossible without their co-operation. Most of their weapons are assault rifles, heavy machine-guns and mortars - easy to hide and hard to find.
The KLA and the head of the Kosovo peacekeeping force Kfor, Gen Sir Mike Jackson, signed an accord in Pristina on demilitarisation of the guerrilla movement late last night.
A statue of a famed writer and symbol of Serbian nationalism was damaged by an explosion in the Kosovo capital Pristina yesterday, coinciding with the completion of a Yugoslav military withdrawal.
The statue honours Vuk Karadjic, a 19th century Serb intellectual who drew up the modern Serb alphabet.