Several ammunition depots, a fuel storage facility and two command posts of the Islamic fighters were destroyed during the air raids on Tando village in the Botlikh district bordering Chechnya, the ministry said.

On Wednesday, Defence Minister Igor Sergeyev and Interior Minister Vladimir Rushailo took part in a meeting of the Dagestan Security Council where a military plan to dislodge insurgents occupying villages in the Botlikh region was worked out.

Russia airlifted an additional 500 soldiers and 30 pieces of heavy military equipment into the region overnight, officials said.

Four Russian soldiers have reportedly been killed in the clash and 20 others injured. According to NTV television, in the nearby district of Tsumada, near the city of Agvaly, two Dagestani police wereinjured by a snipers on Thursday morning.

In a report from the Dagestani Capital Makhachkala, Itar-Tass news agency quoted Russian defence sources as saying the final stage of their campaign to crush the rebels would not begin until next week in order to keep losses to a minimum.

Federal troops have been struggling for nearly two weeks to drive out the Islamic separatists, who under the leadership of Shamil Basayev, crossed into Dagestan on August 7 and seized several mountain villages along Dagestan's administrative border with the breakaway republic of Chechnya. This prompted Moscow to send in troops and deploy air power to root out the fighters.

The Muslim fighters of the fundamentalist Wahhabi sect have declared Dagestan to be an independent Islamic state and are seeking to install Sharia law in the area.

A spokesman in Moscow told Interfax the Chechen warlord, Basayev, was ready to lead an assault on Russia's North Ossetia region on Chechnya's northwestern border. The North Ossetian military baseof Mazdok was used by Russian forces as a springboard during its December 1994 invasion of Chechnya.

Moscow prosecutors have issued arrest warrants for Basayev and his field commanders, identified as the Jordanian-born Hattab and another gunman known only as Gapur. Basayev already tops Moscow's wanted list for his 1995 war-time siege of a Russian hospital that killed some 200 people.

Meanwhile, the Kremlin announced on Thursday that all military operations against the Dagestani and Chechen rebels will soon be complete. Most of the armed formations of the Islamic fundamentalists, who had occupied mountain peaks in the North Caucasus inside Dagestan, have been wiped out, according to senior Kremlin officials on Wednesday night, quoted by the Voice of Russia.

The Voice of Russia correspondent from the war zone added, "Every mountain pass through which the fundamentalists had intruded into Dagestan have been totally blocked."

Dagestan is one of the poorest republics in Russia. Officialestimates say that25 percent of Dagestan's two-million people are currently unemployed, with some 80 percent of the republic living below the poverty line.