Rockets slammed into an oil-processing plant in the western industrial part of the city, setting fires which shrouded the capital in thick, black smoke.

Residents panicked, trying to flee the rocket attacks launched from what seemed to be the Tersk Ridge outside the capital to the north, where Russian troops are positioned. There was no word yet of casualties.

Federal forces and armoured columns rolled ever closer to Grozny, firing artillery at Chechen fighters in the mountain stronghold Bamut and closing in on Gudermes, Chechnya's second biggest town, 30 km east of the capital.

``We want to do away with terrorism, to get rid once and for all of the centre of terrorism, international terrorism in Chechnya,'' Yeltsin said at an award ceremony for academics, sportsmen and soldiers onWednesday.

``Russian soldiers and officers will return peace and calm to the long-suffering Chechen territory,'' he added.

Russian troops were reported to have moved closer on the west, northwest and eastern sides of Grozny, seeking to destroy the Islamic guerrillas whom Moscow blames for staging a series of devastating bomb attacks on apartment blocks.

Russian forces used multiple rocket launchers and heavy guns overnight against guerrillas in the Bamut stronghold.

Interfax news agency quoted the Russian military command as saying its troops had reached the outskirts of Gudermes. It said Russian troops had seized the villages of Azamat-Yurt, Stepnoye, Nizhny Gerzel and Kadi-Yurt in the Gudermes district and had encircled the rebel-held villages of Engel-Yurt and Komsomolskoye.

Meanwhile, the council of Europe's human rights committee has requested an emergency debate on Russia's military intervention in Chechnya, joining a chorus of international criticism.

The committee urged the parliamentaryassembly to take ``the necessary steps'' if Russia ``continued to flout international humanitarian rights and its obligations towards the council of Europe''. It did not elaborate.

Russian generals deny hitting civilian targets, insisting that they are making every effort to negotiate their advance in Chechnya with local authorities rather than fight their way through.

Interfax quoted Russian military sources as saying Chechen Field Commander Sulim Yamadayev, who controls areas surrounding Gudermes, had signalled he was ready to cooperate with Russia.

But the sources also said Gudermes was under the control of radical field commanders Salman Raduyev and Arbi Barayev, making clear there was little chance of taking the town peacefully.

Maskhadov rules out talks with Moscow