Thousands of ethnic Albanians fled to Kosovo from Aracinovo, a suburb of Macedonia's capital, Skopje, as government forces waited for orders to attack rebels who have seized the town.
Locals said that only a few thousand people remained in the town, which has a normal population of about 13,000.
Meanwhile, the rebels threatened to fire shells into downtown Skopje if the army keeps attacking villages held by the insurgents.
"If the shelling doesn't stop, we are able to inflict the same damage on them as they are on us," said a rebel commander who uses the nom de guerre Hoxha.
Defense experts, however, said the rebels in their current locations do not have weapons that could reach such targets.