PRISTINA, Yugoslavia (CNN) -- Serbian authorities, in their latest move to head off the possibility of NATO airstrikes, installed an interim government in Kosovo on Saturday meant to "normalize conditions" in the rebellious province.

The declaration -- which appeared to be part of last-ditch efforts to show that the Serbians intended to end the conflict -- came just two days before a report by U.N. Secretary-General Kofi Annan on whether Belgrade was complying with demands to halt its assault on ethnic Albanians.

If not, Washington has indicated that NATO airstrikes could come within two weeks.

But, like other moves in recent days -- a mass pullback of troops and equipment in Kosovo as well as a series of diplomatic efforts -- the latest announcement drew skepticism.

Ethnic Albanian political leaders have rejected the council as a "body formed by Serbian authorities," not one that would be part of Kosovo self-rule.

The 18-member council, appointed by the Serbian parliament last week, includes Serbians and ethnic Albanians. It is to address local issues in Kosovo, where Yugoslavia began a crackdown in February on independence-seeking ethnic Albanians.

"Our task is to normalize conditions as soon as possible and create conditions for local elections in Kosovo," Zoran Andjelkovic, who heads the council, said at its opening session Saturday. "I hope we will not last for a very long time, because that means we will be successful."

Edita Tahiri, a top ethnic Albanian political leader, condemned the establishment of the council as "strengthening Serbian rule in Kosovo."

The Serbian drive to eliminate the separatist Kosovo Liberation Army has killed hundreds of people and driven an estimated 275,000 from their homes.

Pressure on international leaders to step in has increased in the past week amid revelations of massacres of ethnic Albanian civilians in the forests of Kosovo.

The Yugoslav government in Belgrade said on Friday that the fighting had ended, and blamed continued violence in Kosovo on the KLA.

The ethnic Albanian-run Kosovo Information Center (KIC) said that Yugoslav troops and Serbian special police shelled a number of villages in the border strip near the southwestern town of Djakovica on Saturday. KIC did not report on any casualties.

However, Serbian officials in Pristina denied the report, saying the region had seen no fighting for months. In fact, in some of the villages there were local ethnic Albanian security teams established by the Serb authorities.

"Some of the villages simply do not exist any more. Some are cooperating with the Serbs," a Serbian source who demanded anonymity told Reuters news agency.

The Associated Press and Reuters contributed to this report.