Speaking in front of television cameras at the White House, Mr Clinton said that he regretted the bombing.

But he added: "I think it is very important to draw a clear distinction between a tragic mistake and a deliberate act of ethnic cleansing."

Bill Clinton: An isolated, tragic event

He said he had reaffirmed Washington's commitment to strengthening its relationship with China.

Friday's missile strike on the embassy has complicated the search for a solution to the Kosovo crisis.

In his first public reaction to the bombing, Chinese President Jiang Zemin said the UN Security Council could not discuss any peace plans for Kosovo unless Nato stopped its bombing campaign.

He condemned the Nato action as "absolute gunboat policy".

Jill McGivering's report from Beijing includes pictures of the UK embassy under attack

His remarks came in a telephone conversation on Monday with Russian President Boris Yeltsin, whose Balkans negotiator Viktor Chernomyrdin has flown to Beijing for urgent talks.

As a permanent member of the Security Council, China has the right of veto, and could prevent the progress of a new peace plan for Kosovo thrashed out last week by Russia and the Group of Seven leading industrial nations.

China also indicated it is likely to ask for compensation from Nato.

The Chinese mission to the UN says Nato and parties directly involved in the bombing should "bear all responsibility for the casualties and property damage it has caused".

A top UN official said on Monday that Yugoslav President Slobodan Milosevic was prepared to negotiate a solution for Kosovo on the basis of the G-8 proposal.

Chinese demands

Nato spokesman Jamie Shea: Let's not lose sight of the big picture

China has made four demands of Nato, in a statement issued by Foreign Minister Tang Jiaxuan to the US ambassador:

• an official apology
• a "complete and thorough investigation"
• a detailed public announcement of the results and
• severe punishment for those responsible.

Nato thought it had hit the Federal Directorate of Supply and Procurement - actually one block away

Consultations with the US on human rights, non-proliferation of nuclear weapons, arms control, and international security will be halted until further notice, said its foreign ministry spokesman.

The developments came despite a message from President Clinton to President Jiang in which he apologised for the bombing.

German Chancellor Gerhard Schröder - who is visiting China on a scheduled visit later this week - has called for an inquiry into the bombing.

Nato and Russian officials had appeared to be moving closer to a deal involving a peace-keeping force with a Nato element rather than with Nato at its core.

Beijing demonstrations

A third day of angry protests in China

Protests continued for a third day outside the US Embassy in Beijing, and in other Chinese cities.

Monday's newspapers carried the first pictures of the bombing victims.

A mixed crowd of students, executives and Buddhist monks marched past in an officially-sanctioned demonstration, throwing stones and bottles.

Many protesters have called for the downgrading of relations with the US or for them to be broken off completely.

Duncan Hewitt in Beijing: The mood has turned increasingly ugly

UK citizens have been urged to avoid China following angry demonstrations outside the UK embassy.

The Foreign Office says anyone intending "non-essential" travel to the country should postpone their journey until the situation has improved.

The protesters' anger has also turned on foreign news journalists trying to report the events.

A BBC crew in Beijing was beaten and pelted with stones, accused of insulting China.