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Fighting on the island has been steadily escalating in recent days.
The Greek-led Cypriot government said Turkish jets had dropped 750lbs (340 kg) of bombs and napalm on their strongholds in north-west Cyprus.
"The whole area is on fire," said a spokesman for the Cypriot government.
"We cannot estimate casualties but there must be hundreds. Whole villages have been wiped out."
They also accused the Turkish government of landing troops on the north-west coast of the island.
The President of Cyprus, Archbishop Makarios, a Greek Cypriot, issued an ultimatum to Turkey, threatening to attack every Turkish Cypriot village in Cyprus if the air raids were not stopped.
The raids also brought concern from the Greek government in Athens, which has so far stayed out of the conflict.
The Greek Prime Minister, George Papandreou, called the air raids "crucial", and said, "This is a purely aggressive action which Greece cannot tolerate."
Later in the day, seven Greek Air Force fighters flew over south Cyprus, including the capital, Nicosia, as a show of force.
The air raids were in response to vicious fighting which has been raging for the last three days around the Turkish Cypriot village of Kokkina.
A UN spokesman said that Turkish Cypriots had lost all villages in the area apart from Kokkina to the Greek Cypriots.
Now, he said, there were 200 women and children still in Kokkina and refusing to be moved to safety by the UN.
The UN sent 7,000 troops to Cyprus in March to try to keep the peace between the two sides, after an earlier ceasefire, negotiated in February, broke down.
The decision by the Turkish government to get involved militarily has caused international consternation.
The British Prime Minister, Sir Alec Douglas-Home, cut short his holiday in Scotland to return to London and deal with the crisis. He said during his train journey home that the situation was "very serious".
The United Nations Security council passed an Anglo-American resolution calling for an immediate ceasefire, and it is thought that this, as well as strong diplomatic pressure on Turkey to stop the air raids, brought about today's ceasefire agreement.
The ceasefire held for a short time, although Turkey continued "reconnaissance flights" over the area.
However, fighting broke out once more after peace negotiations failed.
Archbishop Makarios became increasingly isolated, both internationally and from the Greek government.
He remained president of Greek Cyprus until his death in 1977.
In 1974, a Greek-inspired coup prompted a Turkish invasion of the northern third of the island.
Since then Greek and Turkish Cypriots have been divided by a so-called "green line", patrolled by UN soldiers. Thousands were displaced from their homes.
The Turkish Republic of Northern Cyprus was declared in 1983, but has been recognised only by Turkey itself.
A UN plan put to a referendum on 24 April 2004 envisaged a federation of two states - one Greek and the other Turkish - with a loose central government, on the Swiss model with a symbolic, alternating presidency. It was rejected by the Greek Cypriots.
It was rejected decisively by the Greek Cypriots but accepted by the Turkish Cypriots. Cyprus joined the EU in May 2004 but as a divided island.
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