Russian troops Thursday geared up to complete their encirclement of the city, which is up to 80 percent surrounded. The rebels for their part beefed up their defenses in and around the capital in expectation of a major offensive.

Prime Minister Vladimir Putin again made clear Wednesday that Russia's aim was to destroy the guerrillas, accused by Moscow of bombing several Russian cities and of destabilizing the whole North Caucasus region.

But in a sign that Russia still hopes that Grozny and other centers would allow troops in without a fight, Putin urged the rebels to down their arms and promised not to prosecute those whose "hands were not stained with the blood of Russian citizens."

The eight-week-old offensive through Chechnya has brought the army to within a few miles of the increasingly besieged capital. Continual bombing and shelling of villages in southern Chechnya have sent almost 200,000 Chechens fleeing to Russia's impoverished region of Ingushetia.

Russian troops control Chechnya's northern lowlands, the region's second town, Gudermes, as well as the town of Achkoi-Martan -- both secured after winning agreement for residents to allow them in without hostilities.

PUTIN LOOKS AT EXTENDING AMNESTY

Putin, whose tough stance on Chechnya has turned him into Russia's most popular politician, told NTV television late on Wednesday that he could consider extending an amnesty declared in 1996, at the end of Russia's ill-fated Chechen war.

Russian tactics to date have focused on methodical advances on the capital. Despite their limited resistance so far, Chechen fighters are expected to put up a tough defense in Grozny, where President Aslan Maskhadov is reportedly directing defense plans.

Itar-Tass news agency quoted officers in Russia's main base in Mozdok, outside Chechnya, as saying the rebels were building up defenses, mining roads, bridges and buildings.

Russia is trying to set up a pro-Moscow regime in Chechnya and to squeeze out Maskhadov, who has failed to curb the power of Islamic warlords since being elected president in 1997.

Western countries have been critical of Russia's campaign, saying that indiscriminate bombing has caused high civilian casualties and prompted the outflow of refugees.

But the United States said Western unease over the military campaign should not influence the International Monetary Fund's decision on whether to give Russia further funds.

"The last thing I think that we should be doing is trying to turn Russia back into an enemy," Secretary of State Madeleine Albright said Wednesday.

The Organization for Security and Cooperation in Europe (OSCE) said it had cleared the way for preparatory talks in Moscow next Monday on a planned visit to Chechnya in December by the organization's head, Knut Vollebaek.

Foreign Minister Igor Ivanov had previously said he was too busy for the meeting, agreed upon at an OSCE summit last week in Istanbul.

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