Yugoslavia said it would immediately seal its borders to all trade and ban the entry of Bosnian Serb leaders.
A similar ban in May 1993 was barely enforced. But the government's statement and a stinging attack on Bosnian Serb leaders from Serbian President Slobodan Milosevic suggested that this time the rift is for real.
The announcements followed the third rejection of an international peace plan by Bosnian Serb leaders.
Milosevic called on Bosnian Serbs to dump their leaders, whom he branded "war profiteers." He said they had jeopardized their own people and broken previous promises to stop fighting.
"That is why we have to cut off all further relations and cooperation with such a leadership," Milosevic said.
In recent weeks, Milosevic's socialist party has moved to set up its own organization in Serb-held Bosnia. Milosevic's direct appeal to dump Bosnian Serb leader Radovan Karadzic suggested that he now wants to assume leadership of the Bosnian Serbs.
In Sarajevo, a senior Bosnian official said Bosnia's Moslem-led government would be ready to meet Milosevic now he has changed his stance on the war.
Milosevic would first have to recognize Bosnia-Herzegovina, and Bosnia recognize Serbia, the official said.
Russian special envoy Vitaly Churkin has suggested that Belgrade might be able to avoid sanctions if it severed links with the Bosnian Serbs. Churkin dismissed the idea of the referendum, saying he was "skeptical" over such polls in a warring state.
Intense artillery and infantry battles raged Thursday in central and northeastern Bosnia, and UN peacekeepers said Moslem-led government forces gained some ground.
Milosevic, the region's power broker, is widely viewed as the chief instigator of the war in Bosnia and an earlier war in Croatia.
But he now appears anxious to ditch his nationalist proxies in those states and play the role of peacemaker.
Serbia and Montenegro, the only two states left in rump Yugoslavia, face a tightening of 2-year-old economic sanctions imposed for fomenting war if the Bosnian Serbs reject the latest international peace plan. Milosevic apparently wants to stave off economic ruin, which could jeopardize his power.
The government of Yugoslavia said its border with Serb-held Bosnia was closed from Thursday for all supplies except food, clothes and medicine -- items also exempt from the UN embargo on Serbia and Montenegro.
The statement constituted the first indirect admission that Yugoslavia did supply the Bosnian Serbs with fuel and other military supplies. Belgrade constantly denied this.
The Yugoslav government also said it was banning all Bosnian Serb leaders from its territory.
"By rejecting peace, the" Bosnian Serb "leadership has committed the hardest act against the federal republic of Yugoslavia, the Serbian and Montenegrin peoples, and all citizens living in these regions," the government said.
The self-styled Bosnian Serb assembly said it would hold a referendum on the peace plan Aug. 27-28, which Serbia decried as a ruse. Karadzic warned his people to prepare for rationing.
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