BELGRADE, Yugoslavia (CNN) -- U.S. special envoy for the Balkans Richard Holbrooke, shuttling between Belgrade and Kosovo on Saturday, said his efforts to find a diplomatic solution between Yugoslavia and ethnic Albanians were deadlocked.

"We are where we were earlier in the day, we're where we were yesterday," Holbrooke told reporters after he met ethnic Albanian leaders, including Ibrahim Rugova, in Kosovo's provincial capital Pristina.

"(It's an) extremely serious situation," said Holbrooke, flanked by British Ambassador to Yugoslavia Brian Donnelly.

News Highlights: Gallery: The conflict in review News story archive Yugoslavia's Future: What's next for Yugoslavia Map: Who controls what The Peace Settlement: A guide to the peace plan Map: Serb troop withdrawal The Military Campaign: Strike damage assessment Atlas: NATO and the Balkans Background: Timeline: Trouble in the Balkans A who's who of key players Map: Kosovo and its neighbors A history of the KLA

Holbrooke has been meeting repeatedly with ethnic Albanian leaders and Yugoslav President over the past few days as part of an international mission aimed at averting NATO airstrikes.

NATO has threatened to go ahead with military intervention should Milosevic not comply with a U.N. Security Council resolution that calls for a Yugoslav troop withdrawal from Kosovo and the resumption of serious talks on ethnic Albanian autonomy.

Holbrooke, who held three rounds of fruitless talks with Milosevic earlier in the week, was to meet the Yugoslav leader again Saturday.

Any negotiations between Milosevic -- who revoked Kosovo's autonomy status in 1989 when he was president of Serbia -- and ethnic Albanian leaders would involve concessions. Milosevic would have to persuade the ethnic Albanians that his seven-month crackdown on separatist forces in the province has ended; and the ethnic Albanian side would have to acknowledge that it might settle for less than full independence.

NATO ambassadors clear way for airstrike

NATO Secretary-General again underlined on Saturday that Serbian forces were still not meeting international demands for a withdrawal from Kosovo.

"There is still no compliance on the ground," Solana told reporters after a meeting with ambassadors from the 16 NATO allies.

"If Milosevic does not comply, I can tell you that NATO is ready to act."

He said the ambassadors had "cleared all the decisions that need to be taken" prior to an "activation order" that would authorize NATO's military commander to launch airstrikes against Serbia.

NATO officials said those decisions included agreements on rules of engagement, targeting, liaison with humanitarian organizations working in Kosovo and the safety of NATO troops in Bosnia.

Final approval of the airstrike order is being held up by constitutional procedures in some NATO allies -- notably Germany, where the Cabinet is to discuss the issue Monday, and Italy, following the collapse of the government Friday.

Correspondent Brent Sadler, The Associated Press and Reuters contributed to this report.