Fluctuating RPM's

I have a problem with my vehicle turbo diesel.

The problem is that when I first start the car it revs normally at about 900 RPM, but when I hit the gas pedal the revs go up and when coming back down they drop to 500 instead of 900. They do come back to 900 after a second but they drop so low as if the car will shut down.

This lasts for a couple of minutes and then goes back to normal. One key thing to note is that while this is happening drive belt that drives alternator is squealing. When squealing stops then things go back to normal.

I am no mechanic but this looks like an alternator problem to me. So can you help me with this one?

The car is an old injector pump diesel and has no electronic controlled units etc. It should be easy to pinpoint the problem.