The UN's war crimes court prosecutor for the former Yugoslavia on Wednesday welcomed the arrest of its last fugitive Goran Hadzic, saying it marked an important milestone in the tribunal's history.

"I welcome the arrest today of Goran Hadzic," Serge Brammertz said in a statement, released in The Hague where the court is based.

"Hadzic's transfer is a long-awaited development for the victims of the crimes charged against him. It is also an important milestone in the tribunal's history," Brammertz said.

Hadzic, 52, is the last of the 161 people indicted by The Hague-based International Criminal Tribunal for the former Yugoslavia (ICTY) who remained at large.

He faces 14 counts of crimes against humanity and war crimes for the murders of hundreds of people and deportation of tens of thousands Croats between 1992-1993.

Serbian President Boris Tadic earlier announced his arrest as the end of a "difficult" chapter for Serbia in its dealings with The Hague court.

His arrest comes less than two months after Serbian authorities finally captured wartime Bosnian Serb commander Ratko Mladic, the court's most wanted fugitive.

Until the arrest of Mladic, Serbia focussed all its efforts on finding the former Bosnian Serb commander. Following Mladic's capture Serbia was able to use all its manpower to seek Hadzic, Rasim Ljajic, the minister in charge of cooperation with the UN tribunal, explained in an interview last week.

Hadzic, a former warehouse employee at an agricultural plant, rose to prominence as the president of the self-proclaimed Republic of Serbian Krajina (RSK) in Croatia between 1992-1993.

He is wanted on charges that Croatian Serb troops under his command massacred 250 Croats and other non-Serbs taken from a hospital in Vukovar after the city fell to Serbian troops following an almost three-month siege in November 1991.

The siege of Vukovar and the subsequent massacre is one of the darkest periods in the 1991-95 Croatian war.

As the head of the RSK, established by rebel Serbs who opposed Croatia's proclamation of independence from Yugoslavia in 1991, Hadzic is held responsible for a campaign of terror against Croats and other non-Serbs in the border region between Serbia and Croatia.

The 10-page indictment against him also details how Hadzic let the feared Arkan's Tigers paramilitaries of notorious warlord Zjelko Raznatovic beat, torture and kill non-Serb civilians held by units under Hadzic's control.