Chechen rebels said they have retreated from southern mountain positions and from key elevations in Grozny, the Chechen capital, as Russian artillery and rockets pounded their positions again today without letup.

Russian Defense Minister Igor Sergeyev said the final phase of the military operation is nearing its end, apparently referring to the assault on Grozny launched Christmas day. The head of the air force, Anatoly Kornukov, predicted Russian warplanes will intensify their missions over the breakaway region.

A Chechen rebel spokesman, Movladi Udugov, said by telephone from an undisclosed location that guerrilla fighters retreated from two key hills in Grozny, including one near a television tower that had been the site of heavy fighting for weeks. But he said Russians are suffering heavy losses trying to take the city, and Chechens have occupied secure positions on hills farther back.

Four months into Russia's campaign in the breakaway region, Grozny and the southern mountains are the last areas of Chechnya under rebel control, but they are far tougher targets than the lowland towns and villages Russia has captured so far. Russia's force of 100,000 is striking both zones simultaneously to take advantage of superior manpower and split Chechen resistance.

In the mountains, Russian forces are attacking from three directions, pressing from the lowlands in the north, sending marines across mountain passes from the east and dropping paratroops along the southern border with Georgia. Udugov said the Russian troops entering the mountains from the east "enjoyed a certain success" in the Sharoi district, forcing Chechens to retreat about a half-mile, but added that Chechens pushed them back in the nearby Vedeno district as far as the pass leading to the neighboring Russian region of Dagestan.

Little verifiable information has been available about the extent of street fighting in Grozny. Both sides say they are inflicting heavy losses while suffering virtually no casualties themselves. Russian generals have played down the scale and pace of the fighting in Grozny, clearly concerned about comparisons with the hasty and botched operation to seize the city five years ago, which led to huge losses.

They say their forces are moving slowly into Grozny to reduce casualties among troops and civilians, between 10,000 and 40,000 of whom remain trapped in basements under constant bombardment, with little food or firewood.

The Interfax news agency quoted Sergeyev, the defense minister, as telling reporters the operation in Grozny and the mountains will be the final military phase of the campaign. "I believe the operation in Chechnya is ending, at least its active phase," he said. He also said the next step will be rebuilding the economy in Russian-held territory.

This "will mostly depend not on the army, but how the state and government set up their economic, social positions on liberated territory," he said, adding: "Although it seems there will be some work for [the army] to do as well."