By Thomas Escritt

THE HAGUE (Reuters) - The former head of the Yugoslav army was acquitted on Thursday of charges of aiding and abetting atrocities committed in Bosnia and Croatia during the 1990s, in a ruling that was condemned by victims but welcomed by Serb officials.

United Nations war crimes judges said Momcilo Perisic had provided legitimate military support to the ethnic Serb Army of Republika Srpska (VRS) forces in Bosnia, but ruled he had not ordered them to commit war crimes.

"While Mr Perisic may have known of VRS crimes, the Yugoslav Army aid he facilitated was directed towards the VRS's general war effort rather than VRS crimes," said Theodor Meron, president of the appeals chamber at the tribunal in The Hague.

Dressed in a charcoal-grey suit and a black tie, a stern-faced Perisic, 68, showed no emotion as Meron read out the acquittal and ordered his immediate release.

Rebel Serbs fought to carve out an ethnically Serb state in Bosnia between 1992 and 1995 after its Muslims and Croats voted for independence from Serbian-led federal Yugoslavia.

Judges said he also was innocent of ordering Serbian forces to shell the Croatian capital Zagreb.

Serb forces committed some of the gravest crimes in post-war European history during Yugoslavia's break-up, including the massacre of 8,000 Muslim men and boys in Srebrenica, and the siege of Sarajevo in which more than 10,000 civilians died.

The acquittal means the International Criminal Tribunal for the Former Yugoslavia (ICTY) has not convicted a single Belgrade official for involvement in crimes in Bosnia and Croatia, which claimed tens of thousands of lives.

"We are still digging up the bones of our sons, and we know all the evil came from Serbia," said Munira Subasic, whose husband and son were killed in Srebrenica.

The court put Slobodan Milosevic, the long-serving Yugoslav president who appointed Perisic and presided over the break-up of multi-ethnic Yugoslavia, on trial but he died in detention in 2006 before its conclusion.

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Serbian officials welcomed the verdict, which follows the acquittal on appeal last year of Ante Gotovina, the Croatian general who led the counter-attack that took the Croatian region of Krajina back from Serb forces.

While Croatia has been welcomed back into the international fold and will join the European Union this July, Gotovina's acquittal fuelled a belief in Serbia that the ICTY was an instrument of an international community that was biased against Serbs.

"This ruling is extremely important for Serbia," said Bruno Vekaric, the Serbian war crimes prosecutor. "They have concluded that General Perisic did not violate the customs of war ... as a member of the Yugoslav Army."

Lower court judges sentenced him to 27 years in prison in 2011 after a six-year trial. They said he regularly met and provided guidance to Serb commanders in Bosnia and Croatia, providing them with millions of bullets and thousands of shells.

But appeals judges accepted defense claims that Perisic was implementing policy set by Milosevic, the Yugoslav president, and that he had provided legitimate support to armies that were engaged in fighting a war.

Gregor Guy-Smith, Perisic's lawyer, welcomed a "common-sense" verdict.

But Pedrag Matic, Croatia's minister for war veterans said his country would respect a verdict it disagreed with.

"We have to trust the Hague tribunal's decisions, even if we personally don't agree with them," he said.

While Gotovina immediately was flown back by government jet to a rapturous welcome in Croatia's main public square following his acquittal, Perisic's lawyers said his return would be a more low-key journey on a scheduled flight to Belgrade on Friday.

(Additional reporting by Daria Sito-Sucic in Sarajevo, Aleksandar Vasovic in Belgrade and Zoran Radosavljevic in Zagreb; Editing by Michael Roddy)