By Mark Heinrich

ZAGREB, May 3 (Reuter) - The Croatian army scored its biggest victory yet over rebel Serb forces in an offensive which aroused international criticism and sent repercussions of unknown dimensions rumbling through the Balkans.

Croatian forces seized control of all key points in the Western Slavonian enclave, held by Serbs since 1991, on Tuesday after charging across U.N. truce lines with tanks and troops in a dawn raid one day earlier.

The assault produced swift retaliation from the Croatian Serbs who rocketed the centre of Zagreb. Five people were killed and 134 wounded when missiles struck close to ministry buildings and the U.S embassy.

The United States called on both sides in the fighting to withdraw their forces and allow the United Nations to control the area.

But Mario Nobilo, Croatia's envoy to the United Nations, said: "No, we are not going to withdraw from this territory. This is Croatian territory."

A Serb officer commanding 600 troops, surrounded by Croatian forces in an area to the north of Western Slavonia, agreed to surrender and hand over weapons to U.N. peacekeeping forces, a U.N. spokeswoman said.

It was Croatia's biggest recapture of territory since its Serb minority rebelled against its independence from Yugoslavia in 1991, seized one-third of the country and set up their own self-styled Republic of Serb Krajina.

A U.S. official who asked not to be identified said Washington did not support Serb control of the disputed areas but believed that Croatia should use diplomacy and not force to re-establish sovereignty.

The Croatian forces, meeting little resistance, took control of Okucani, Western Slavonia main town, the cross country motorway and positions in the north of the pocket in the heaviest fighting in the republic since 1993.

U.S. Secretary of State Warren Christopher and Russian Foreign Minister Andrei Kozyrev agreed by telephone that their countries should work together to try to restore U.N. authority in Croatia, a State Department spokesman said.

They also agreed that the "Contact Group," comprising British, French, German, Russian and U.S. officials, which has hitherto focused mainly on the conflict in Bosnia, should "get involved energetically" on the Croatian issue, he said.

At least 5,000 Serbs out of the 15,000 living in Western Slavonia fled to the adjoining republic of Bosnia, despite assurances from Croatian President Franjo Tudjman of an amnesty and protection for all "except war criminals."

The Bosnian Serbs, furious that U.N. peacekeeping troops did not stop the Croatian advance, threatened to resume fighting in Bosnia where a four-month ceasefire has just expired.

Their leader, Radovan Karadzic, accused Zagreb of "impudent aggression...enacted in front of the international community. No one can stop us taking arms to defend our people."

Jittery European governments have threatened to pull their troops out of U.N. peacekeeping operations in former Yugoslav republics if the warring sides resume full-scale fighting.

Serbian President Slobodan Milosevic and other leaders of rump Yugoslavia described the Croatian offensive as a criminal attack against peace efforts but also condemned the "bombing of cities," a reference to the Krajina Serb attack on Zagreb. The U.S. ambassador to Croatia, Peter Galbraith, said the four rockets fired into Zagreb carried cluster-bomb warheads. He denounced the attack as an "outrageous response...designed to kill as many civilians as possible in a major Europen capital."