By Neil MacDonald in Belgrade

Parties in Serbia’s deeply divided government agreed to hold elections again in May to choose whether to continue pursuing European Union integration or sever ties because of the EU’s supporting Kosovo’s declaration of independence three weeks ago.

Vojislav Kostunica, the nationalist-leaning prime minister, called at the weekend for the early elections, saying his coalition government with pro-EU parties could no longer function amid differences over how to react to the EU’s declining to confirm Serbia’s sovereignty over the breakaway province.

“A government that does not have a unified policy cannot function. That is the end of the government,” Mr Kostunica said in a press conference on Saturday.

Mr Kostunica withheld his resignation, instead saying he had scheduled a session of the government on Monday to discuss dissolving parliament and going to elections.

But with the government’s pro-EU faction welcoming his offer, the troubled coalition formed last year looks certain to fall. While Brussels and pro-EU Serbs believed they had committed Mr Kostunica to pursuing integration no matter what, he insisted the nub of the deal was that Serbian territorial integrity would come first.

The prime minister and his nationalist-leaning allies within the coalition therefore want to stop pursuing ties with the EU as long as the 27-member bloc continues to assist ethnic-Albanian dominated Kosovo, which declared independence on February 17.

Since then, the government has led the largest ex-Yugoslav republic into renewed diplomatic isolation by downgrading diplomatic relations with countries recognising Kosovo, while the prime minister and other officials blamed the US for the torching of the US embassy in Belgrade by rioters on February 21.

Although his faction holds a minority of cabinet seats, Mr Kostunica says he would work with the hard-line nationalist opposition in parliament to freeze EU integration – including efforts to sign a pre-accession agreement with Brussels.

He and his cabinet allies last week approved the text of a resolution now before parliament from the opposition Serb Radical party, the assembly’s largest single bloc, which would cancel relations unless Brussels recognises Serbia’s “constitutional borders” and calls off an EU-led police and justice mission in the “illegal” Balkan breakaway state.

The government’s pro-EU faction, led by Serbia’s president, Boris Tadic, also rejects Kosovan independence, yet wants to proceed with EU integration anyway.

But Kosovo’s “co-ordinated” declaration, carried out with tacit cooperation from Brussels and followed by rapid recognition by most EU member states, has made the unhappy Serbian “democratic bloc” unsustainable.

EU officials last year encouraged Mr Tadic to form the coaltion, giving Mr Kostunica a second term as prime minister in order to keep the more numerous Radicals out of power.

The Radical party’s acting leader, Tomislav Nikolic, welcomed the chance to face voters again two months from now. His party is riding high, with its support climbing to 40 per cent according to a Gallup poll last month.

Mr Kostunica said the elections ought to be held on May 11, when local elections are already scheduled. He held back from resigning in order to retain his say over the date, he said, rather than let Mr Tadic waste 30 days looking for another prime minister.

“I could resign immediately, but … I thought that was a pointless and irrational solution,” Mr Kostunica said. Mr Tadic’s Democratic party said early elections were “the only democratic and realistic solution.”

Smaller coalition members on both sides welcomed an end to the “torture” of a government that has been dysfunctional for months.

Serbia effectively lost Kosovo in 1999, when Nato intervened on the side of ethnic Albanian rebels against the autocratic Serb leader, Slobodan Milosevic. Pro-democracy parties overthrew Mr Milosevic less than two years later, yet never accepted the loss of 15 per cent of Serbia’s territory.